Presented by:

Greentec

Associat

Presented to:

Project Preparatory Technical

Assistance

No. 4090-SRI

Human Resource Investment Project

FFFiiinnnaaalll RRReeepppooorrrttt

ion of Canadian Community Colleges (ACCC), Canada

Democratic Socialist Republic of Sri Lanka

Asian Development Bank

In association with

March 2004

h Consultants (PVT) Ltd., Sri Lanka

CURRENCY EQUIVALENTS (as of 29th February 2004)

Currency Unit – Sri Lanka Rupees (SLRs)

SLRs1.00 = $0.01 $1.00 = SLRs100.00

ABBREVIATIONS

ADB – Asian Development Bank ATI – Advanced Technical Institute BOI – Board of Investment BOM – Board of Management CBT – Competency Based Training CCC – Ceylon Chamber of Commerce CEO – Chief Executing Officer CGTTI – Ceylon German Technical Training Institute CITI – Clothing Industry Training Institute COT – College of Technology DT – Diploma in Technology DTET – Department of Technical Education and

Training EIRR – Economic Internal Rate of Return

EMIS – Educational Management Information System FCCISL – Federation of Chambers of Commerce and

Industry of Sri Lanka GCE A-L – General Certificate of Education –

Advanced Level GCE O-L – General Certificate of Education – Ordinary

Level GDP – Gross Domestic Product GNI – Gross National Income HAS – Human Resource Endowment Fund/Human

Resource Investment Fund Administrative Services

HND – Higher National Diploma HNDE – Higher National Diploma in Engineering HREF – Human Resource Endowment Fund HRIF – Human Resource Investment Fund HRIP – Human Resource Investment Project IT – Information Technology ITABs – Industry Training Advisory Bodies ITOs – Industry Training Organizations ITUM – Institute of Technology of University of Moratawa MTET – Ministry of Tertiary Education and Training NAITA – National Apprentice and Industrial Training

Authority NATP – National Association of TEVT Providers NGOs – Non-Governmental Organizations

NITESL – National Institute of Technical Education of Sri Lanka

NP/TES – National Polytechnic/Technological Education System

NPV – Net Percent Value NTA – National Technology Award NTAS – National Technology Awards Scheme NTTTC – National Technical Teacher Training College NVQ – National Vocational Qualification NYSC – National Youth Services Council OUSL – Open University of Sri Lanka PIU – Project Implementation Unit PPP – Public-Private Partnerships SDP – Skills Development Project SLIATE – Sri Lanka Institute for Advanced Technical

Education SMEs – Small and Medium-sized Enterprise TA – Technical Assistance TC – Technical College TED – Technical Education Department TET – Tertiary Education and Training TEVT – Technical Education and Vocational

Training TVEC – Tertiary and Vocational Education Commission UCSC – University of Colombo School of Computing VET – Vocational Education and Training VTA – Vocational Training Authority VTCs – Vocational Training Centres WB – World Bank WUSC – World University Services of Canada

NOTES

(i) The fiscal year [FY] of the Government of Sri Lanka ends on 31st December.

(ii) In this report, “$” refers to US dollars

v

Independent Advanced Technical Institutes MAP OF SRI LANKA

nJ

11 Technical Colleges

Attached Advanced Technical Institutes n

N

M

Mannar

Vavuniya

10Trincomalee

Anuradhapura

3

Puttalam Polonnaruwa

6

A

5

4

Batticaloa Kurunegala

9 Matale

Colombo

Kegalle

Gampaha 2

3Kandy8 a

6Nuweraeilya

5 Monerag

Ratnapura 7 4 Kalutara

17

1 2

Galle Matara

Locations of Advanced Technical InstituteColleges (TCs)

Badull

affna

ulathivu

ala

H

s (AT

mpara

ambantota

Is) & Technical

vi

INTRODUCTION

1. On 8 September 2003, the Project Preparatory Technical Assistance (PPTA No. 4090-SRI: Human Resource Investment Project) of the Asian Development Bank (ADB) for the Government of Sri Lanka commenced with the mobilization of consultants from the Association of Canadian Community Colleges (ACCC) and Green Tech Consultants (Pvt) Ltd. An Inception Mission from ADB visited Sri Lanka from 12 -16 September 2003 to monitor the TA implementation and coordinate interested donors for the Project. Two Review Missions came for the TA Project from 9 -10 December 2003 and 10 - 11 February 2004. 2. The overall objective of the TA is to support the Government’s poverty reduction strategy and draft National Skills Development Policy by enhancing the country’s skills-based competitiveness. The objective of the assistance is to improve the relevance, effectiveness and efficiency of skilled workers produced through institutional development and policy reform in technical education and vocational training (TEVT). The TA will assist the Ministry of Tertiary Education and Training (MTET) to (i) undertake an analysis of the TEVT sector, (ii) develop a national policy, strategic framework and costed action plan for TEVT and (iii) prepare an investment project that will spearhead reforms in TEVT through the Human Resource Endowment Fund (HREF), with emphasis on unemployed youths. 3. The main outputs of the TA will include (i) a policy and strategic framework, (ii) a plan for management development and institutional strengthening at central levels, including standard setting, quality assurance, accreditation, criteria-based funding, (iii) a plan for in-service training in technical skills and industrial exposure for instructors, and (iv) an investment project that will address key systemic problems and link training supply with demand. 4. The Ministry of Policy Development and Implementation (MPDI) served as the Executing Agency for the TA. The MTET acted as the implementing agency. A Steering Committee was organized comprising key stakeholders to provide guidance for the TA. A team of two international consultants and four domestic consultants were recruited to provide specialist services, totaling 22 person-months. 5. This report presents the Investment Project developed to improve the relevance, efficiency and effectiveness of the TEVT sector in Sri Lanka particularly in higher-level technical skills development. Specifically, the objectives of the proposed project include: (i) to operationalize the Human Resource Endowment Fund as a spearhead for changing TEVT into a sustainable public-private partnership based system, (ii) to strengthen MTET’s support for a demand driven, employer responsive, public-private partnership based technician education system, and (iii) to strengthen the capacity of selected public sector TEVT institutions to be demand driven and partnership based colleges of technology so as to respond to the needs of industry for technicians. 6. Appendix 1 lists the persons consulted. They represent the government, private sector and non government organizations and provided advice on the TEVT sector analysis and on the design of the Investment Project.

Table of Contents MAP ................................................................................................................................v INTRODUCTION ...................................................................................................................vi I. PROJECT BACKGROUND AND RATIONALE...................................................... 1

A. Overall Economic Performance ...................................................................... 1 B. Foreign Employment....................................................................................... 4 C. Labour Force Characteristics.......................................................................... 5 D. Post-Secondary Education and Skills Development....................................... 6

1. Education and Training Systems ........................................................ 6 2. Limited Opportunities for Higher Education ........................................ 7 3. Post-Secondary Education is Underdeveloped................................... 7 4. Poverty and Social Dimensions in relation to TEVT............................ 8 5. Existing Capacity in TEVT................................................................... 9 6. Needs Assessment of TEVT in the North and East ........................... 14 7. External Efficiency of Public TEVT..................................................... 15 8. Surveys Undertaken........................................................................... 18 9. Stakeholders’ Consultation on the Proposed Project ......................... 36 10. Steering Committee (SC) ................................................................... 37

E. Problems and Drawbacks of the TEVT Sector .............................................. 38 1. Poorly Motivated Student Intake ........................................................ 38 2. A Supply-Driven Model ...................................................................... 39 3. Weak Public-Private Sector Partnerships .......................................... 39 4. Paucity of Choice or Options.............................................................. 39 5. Few Incentives for Change ................................................................ 40 6. Block Based Funding of Institutions ................................................... 40 7. Dearth of Technician Standards......................................................... 40 8. Ineffective Management Information System..................................... 41 9. Poor TEVT Quality Assurance ........................................................... 41 10. Weak Overseeing of the Quality Assurance System.......................... 41 11. Poor Promotion of TEVT .................................................................... 42 12. Too Centralized Governance of TEVT ............................................... 42 13. Poor Strategic Planning ..................................................................... 42 14. Inadequate Budgets and Incremental Budgeting ............................... 43 15. Lack of Managerial and Entrepreneurial Skills ................................... 43 16. Outmoded, Non-standardized Curricular Programs and Course

Offerings............................................................................................. 43 17. Poor Condition and Utilization of Physical Facilities .......................... 45 18. Shortage of Qualified and Highly Motivated Training Staff ................ 45 19. Traditional Program Delivery and Quality Control .............................. 46

F. Opportunities in the TEVT Sector for Possible Interventions......................... 46 1. Incentives for Change ........................................................................ 46 2. Student Selection for Technician Training ......................................... 46 3. Giving Industry a Leadership Role in TEVT ....................................... 47 4. Upgrading the Existing Workforce...................................................... 47 5. Promoting Public-Private Partnerships .............................................. 47 6. Expanding the Technician Training System....................................... 48 7. Incentive-Driven Public TEVT System ............................................... 48 8. Performance-Based Institutional Finance System ............................. 49 9. Industry-Validated Technician Standards .......................................... 49 10. Educational Management Information System (EMIS) ...................... 50

11. TEVT Quality Assurance.................................................................... 50 12. Overseeing of the Quality Assurance System.................................... 51 13. Social Marketing and Career Guidance ............................................. 52 14. Governance at the Institutional Level................................................. 52 15. Strategic Planning .............................................................................. 52 16. Financial Planning and Management................................................. 53 17. Entrepreneurial Management............................................................. 53 18. Curriculum Innovation ........................................................................ 53 19. Equipment Upgrading ........................................................................ 53 20. Facility Renovation............................................................................. 54 21. Staff Training...................................................................................... 54 22. Part-time Learning.............................................................................. 54

G. Government Strategies and Plans in Development....................................... 54 1. Economic, Industrial and Investment Policies.................................... 55 2. Human Resource Development Policy and Thrust ............................ 57 3. Private-Public Partnerships................................................................ 58

H. Funding Agencies’ Strategies in Education and Training .............................. 61 1. ADB Loan and Technical Assistance ................................................. 61 2. Other External Assistance.................................................................. 62

I. Lessons Learned ........................................................................................... 63 J. Relationship of the Proposed Project with Existing ADB Projects ................. 64

1. Skills Development Project (ADB Loan No. 1707–SRI [SF]).............. 64 2. Distance Education Modernization Project (ADB Loan No. 1999–

SRI [SF]) ............................................................................................ 65 II. THE PROPOSED PROJECT ................................................................................ 65

K. Project Goal ................................................................................................... 65 L. Project Objectives.......................................................................................... 66 M. Project Components ...................................................................................... 66

1. The Human Resource Endowment Fund (HREF):............................. 67 2. The Human Resource Investment Fund (HRIF) ................................ 69

N. Special Features of the Project...................................................................... 76 1. Use of incentives and not directives................................................... 76 2. Investment in private sector and in-industry training in growth areas .76 3. Investment in public-private partnership for demand-driven and

industry-responsive training ............................................................... 76 4. Promotion of a National Technology Awards (NTA) scheme............. 76 5. Voluntary registration and accreditation system with active peer

participation........................................................................................ 76 6. Moving TVEC away from provision of training to setting standards and

auditing performance ......................................................................... 77 7. HREF/HRIF Administrative Services (HAS) ....................................... 77 8. Social marketing and career guidance component ............................ 77 9. Internationally benchmarked training standards ................................ 77 10. Distance mode of learning ................................................................. 77 11. Eligibility for admission of GCE O-L qualified youth and employed

workers with NCT............................................................................... 78 12. Laddering system and linkage with higher education ........................ 78

O. Implementation Strategy................................................................................ 78 1. The Human Resource Endowment Fund (HREF).............................. 78 2. The Human Resource Investment Fund (HRIF) ................................ 78 3. Upfront TA for the Project .................................................................. 80

P. Project Cost and Financing Plan ................................................................... 81 1. Project Cost........................................................................................ 81 2. Operation and Maintenance (O&M) ................................................... 83 3. Financing Plan ................................................................................... 83 4. Overall Project Financial and Economic Sustainability ...................... 83

Q. Implementation arrangements ....................................................................... 84 1. Project Management .......................................................................... 84 2. Implementation Period ....................................................................... 85 3. Procurement Arrangements ............................................................... 85 4. Advance Action .................................................................................. 87 5. Disbursement Arrangements ............................................................. 87 6. Accounting, Auditing, and Reporting.................................................. 87 7. Project Performance Monitoring and Evaluation................................ 87 8. Project Review ................................................................................... 88

III. TECHNICAL ASSISTANCE .................................................................................. 88 IV. PROJECT BENEFITS, IMPACTS AND RISKS..................................................... 89

R. Project Benefits and Impacts ......................................................................... 89 1. General .............................................................................................. 89 2. Economic Benefits of HREF............................................................... 89 3. Economic Benefits of HRIF ................................................................ 92 4. Economic Analysis of the Overall Project .......................................... 94 5. Institutional Benefits ........................................................................... 95 6. Social Benefits ................................................................................... 95 7. Mental health...................................................................................... 96 8. Poverty reduction ............................................................................... 96

S. Assumptions and Risks ................................................................................. 96 1. Implementation Risk........................................................................... 96 2. Institutional Risk ................................................................................. 96 3. Technical Risk.................................................................................... 97 4. Social Risk ......................................................................................... 97 5. Overall Project Financial and Economic Sustainability ...................... 97

V. ASSURANCES...................................................................................................... 98 T. Condition of Loan Effectiveness .................................................................... 98 U. Other Specific Assurances ............................................................................ 99 V. Key Policies Needed...................................................................................... 99

Tables Table 1: Classification of Employment by Occupational Categories (2001) ...........................3 Table 2: Foreign Job Orders and Departures .........................................................................4 Table 3: Enrolments in Major Public TEVT Providers, 1998–2002....................................... 10 Table 4: Training Outputs of Major Public TEVT Providers, 1998–2002 .............................. 11 Table 5: Student Intake and Pass-Outs in Technological Institutions, 2002......................... 12 Table 6: Number of Students at Various Exit Points of the School System in the North and East

.............................................................................................................................. 15Table 7: Estimated Employment Demand by Industry Level for Year 2007.......................... 19 Table 8: Projected Additional Employment by Occupation Level for Year 2007................... 20 Table 9: Present Stock and Participation Rate of Skilled and Technical Labour Force........ 20 Table 10: Number and Ratios of TEVT Graduates to the Present Stock of Skilled and Technical

Labour Force ......................................................................................................... 21 Table 11: Remuneration Received by TEVT Graduates by Sector ...................................... 22

Table 12: Salaries Received by Technicians, Technologists, and Engineers in the Public Sector.............................................................................................................................. 23

Table 13: Demand, Supply and Gap for Technicians and other Associate Professionals.... 24Table 14: Demand, Supply, and Training Gap for Skilled Workers ...................................... 25 Table 15: Gaps between Job Orders and Departures for Selected Jobs in the Technician and

Associate Professional Category – 2001 and 2002 .............................................. 26 Table 16: Gaps between the Job Orders and Departures for Selected Jobs in the Skilled Worker

Category – 2000 and 2001.................................................................................... 27 Table 17: Identified Key Areas for Advanced Training Provision.......................................... 57 Table 18: External Assistance to the Education and Higher Education Sectors................... 61 Table 19: Other External Assistance in Education and Training........................................... 62 Table 20: Summary of Project Cost ($000)........................................................................... 82 Table 21: Proposed Financing Plan of the Project ($000) .................................................... 83 Table 22: Indicative List of International and Local Fellowships Programs .......................... 85 Table 23: Distribution of Manufacturing Establishments by Major Industrial Classification .. 91Table 24: Estimation of Economic Benefits of HREF Component ........................................ 92 Table 25: EIRR on HRIF Investment .................................................................................... 94 Table 26: EIRRs of the Combined Components................................................................... 95 Appendices List of Persons Visited ........................................................................................................ 100 Education and Training Systems in Sri Lanka .................................................................... 105 Summary Poverty Reduction and Social Strategy .............................................................. 106 Distribution of TEVT Providers by District........................................................................... 117 Distribution of Major Public Providers of TEVT by Province and District, 2003 .................. 118TEVT Sector Analysis ......................................................................................................... 119 Unit Cost of Technical Training........................................................................................... 135 Problem Tree ...................................................................................................................... 138 National Qualifications Framework for Sri Lanka................................................................ 139 Project Framework Matrix ................................................................................................... 140 Proposed Human Resource Endowment Fund Schemes .................................................. 149 Vision of the Colleges of Technology (COTs)..................................................................... 150 Project Design Summary .................................................................................................... 154 HREF/HRIF Administrative Services (HAS)........................................................................ 155 Terms of Reference for the HREF-HRIF Administrative Services (HAS) ........................... 156Quality Assurance............................................................................................................... 164 Process of Selecting Institutions to be Supported by HRIP ................................................ 165 Cost Estimates ($000) ........................................................................................................ 166 Breakdown of Project Costs by Component ....................................................................... 167 Financing Arrangements ($000) ......................................................................................... 172 Project Implementation Management ................................................................................. 173 Project Implementation Schedule ....................................................................................... 174 Procurement Packages....................................................................................................... 180 Consulting Services Requirement of the Project ................................................................ 181 Terms of Reference for Consultants ................................................................................... 182 Project Performance Monitoring Indicators......................................................................... 194 Computation of Economic Benefits of HREF and HRIF...................................................... 196 Matrix of Key Policies Required by the Project ................................................................... 201

I. PROJECT BACKGROUND AND RATIONALE A. Overall Economic Performance 1. Sri Lanka reached lower middle-income status in 1997 at a per capita income of $804 and reaching gradually but steadily to $858 in 2002 based on a 3% GDP growth rate combined with a low population increase. This is amidst the country’s worst economic performance in 2001 since its independence with the contraction of the economy by 1.4%. It has been the result of falling export demand due from the global slowdown and low agricultural yields as drought persisted. Inflation has continued to soar coupled with worsening fiscal deficits of nearly 10% of GDP in 2001, according to ADB estimates. Similarly, the country has had to endure the economic fallout of the attack of its international airport in 2001 causing the sudden decline in tourist arrivals. Exchange rate adjustments have reflected the adverse effects on the balance of payments resulting in a substantial depreciation of the Sri Lanka rupee from SLRs40.24/$ in 1990 to SLRs96.73/$ in 2002. 2. The most critical issue confronting the country related to the effects of the ethnic conflict that started in the early 1980’s and directly resulted in heavy economic and social losses. Public expenditure on defence reached more than 20% per annum during the period of the conflict, greatly reducing the availability of development projects in the country. The financial difficulties caused by the high defence spending, affected all sectors of the economy including physical, economic and social developments. 3. Power cuts lasting as much as four to eight hours a day have occurred due to system failures and low water levels. This, together with the slower than expected global economic recovery, have brought a weaker performance of the industry sector, especially in manufacturing. While power outages were eliminated in mid-2002, system instability remains. The availability of a reliable power supply is a priority for aiming at higher growth rates. 4. In September 2002, the Government undertook a historic initiative by lifting the ban on the Liberation Tigers of Tamil Eelam (LTTE). This opened opportunities for peace talks to settle the civil conflict that had festered for nearly 20 years in the North and East of Sri Lanka. According to ADB estimates, hostilities reduced the regional contribution to GDP of the North and East from 15% in the 1980s to 7.5% in 2001, causing 65,000 deaths and countless injuries, displacement of 800,000 people, and severe damage to physical infrastructure (i.e. roads, bridges, harbors, buildings, schools, etc.), relocation of people and investments from the region to elsewhere nationally or abroad, major losses in productive assets, almost nil new investment for 20 years, widespread disruption of movement of people, goods, services, marketing, distribution and trade. As peace reigns, it has provided opportunities to address the physical destruction of the civil conflict, reallocation of resources from war-related expenditures to civilian and social uses, an enabling environment for poverty reduction and a more reassuring setting for domestic and foreign investments and tourism. 5. The objectives of this Human Resource Investment Project (HRIP) aim to increase the quality and quantity of skilled labour to support the economy, and to provide employment opportunities to school leavers and to the youth sector of the labour force. Higher economic growth leads to a greater demand for skilled labour, however, even the achievement of moderate growth requires a large corps of skilled workers. Despite the recent political turmoil, it will relatively safe to assume that the project’s objectives of improving labour productivity need not be changed with a new government as this is not controversial.

6. Currently, the country’s economy is dominated by the services and manufacturing sectors. Up to the late 1970’s the agriculture sector provided the main support. In 2002, services accounted for 53.6% of the Gross Domestic Product (GDP) at current factor cost prices, 26.3% industry, and 20.1% agriculture. The employment breakdown, in 2002, shows services accounting for 45.8%, industry 21.1%, and agriculture 33.1%. 7. The Board of Investment (BOI), an autonomous body established for the purpose of promoting foreign investment, and the Ministry of Industries, have jurisdiction over the industry. The BOI approved projects in operation totalled 2,026 at the end of 2002 while 1,505 industries were registered with the Ministry of Industries. A high concentration of industries (867) under both categories is found in the Colombo district, and 1,103 establishments registered with the Ministry of Industries are also located in the same district. The Western Region consisting of Colombo, Gampaha, and Kalutara districts is the most developed region. It accounted for 76% of BOI projects and 89% of establishments under the Ministry of Industries. Over the last three years, 434 new industries were established in the country with the Western Region attracting 317, or 73%. Apart from these medium and large-scale projects, there are also a large number of small-scale operations, which are primarily family-based and distributed throughout the country. 8. The industrial sector is divided into nine sub-sectors. In terms of value added under current prices, textile, wearing apparel, and leather products accounted for about 38.7% in 2002 (39% in 1990). The second highest contribution is from the food, beverage, and tobacco products sector with a 30.9% share in 2002 (39.0% in 1990). The next important categories are the chemical, petroleum, rubber, and plastic products with an 11.4% contribution in 2002 (7.8% in 1990); and non-metallic products with 8.7% and 15.3% for 1990 and 2002, respectively. The remaining sub-sectors such as wood and paper products, basic and fabricated metals, account for less than 10%. 9. The Census and Statistics Office’s Labour Force Survey (2000) estimated manufacturing employment at 1,044,000 or 16.6% of the total employed population consisting of 5,200,000, of which 524,800 are females. Of this number, paid employment in the manufacturing sector has been estimated at 743,000, which is about 70% of all employees in the sector. This figure includes about 338,700 females employed in the textile and garments sector. 10. There is no official estimate of skilled employed labour under the purview of the technical education and vocational training sector. In the absence of such information, indirect methods need to be employed to broadly estimate the size of the skilled labour force having such qualifications. The composition of the employed labour force in the technical-related categories is likely to be reflected in some of the occupational categories of the Labour Department classification shown in Table 1 (next page). Out of the ten categories, four categories—professionals, technicians and associate professionals, craft and related workers, and plant and machinery operations—are expected to include workers with skills in technical education and vocational training. Since the definition of this classification is based on the Wage Board’s definition, which determines these categories on the basis of salaries, these groups are also likely to include people with no formal training in technical education, but have long experience in the industry. Taken together, the first four categories account for about 34% of the total employed labour force.

Table 1: Classification of Employment by Occupational Categories (2001)

Occupational Category Employed Population %

Senior Officials & Managers 87,304 1.4 Professionals 355,452 5.7 Technicians and Associate Professionals 342,980 5.5 Clerks 299,328 4.8 Sales & Service Workers 779,500 12.5 Skilled Agricultural & Fishery Workers 1,421,808 22.8 Craft & Related Workers 991,524 15.9 Plant & Machine Operators & Assemblers 411,576 6.6 Elementary Occupations 1,421,808 22.8 Undefined 124,720 2.0 Total 6,236,000 100.00 Source: Ministry of Employment and Labour, 2003. 11. The same Census and Statistics Labour Force Survey (2000) provides a breakdown of the number of workers who had vocational training in all the occupational categories. In 2000, these were estimated at 148,000, which represents about 2% of the employed labour force. Of these, the most relevant areas are engineering and related fields (1,700), technical and related fields (3,220), and other vocational training (79,900). The number of male workers is 70,686 (48%) and of female workers is 77,257 (52%). Since the females account for 51,257, or 70%, in the other vocational categories, primarily in textile and garments. 12. The lack of information as to the portion of the labour force that received technical education or vocational training suggests that the number in is relatively small. Furthermore, with the exception of some unemployment in areas of prior conflict, the industry information available reveals that there is practically no unemployment among those trained in the skilled labour categories. In fact, the demand for skilled labour in all industry groupings requiring technical education and vocational training is quite significant. In most areas, there is a shortage of qualified skilled workers. This is a clear indication that the demand for skilled labour even under slow to moderate growth circumstances is higher than the available supply of workers. If the growth rate is to be accelerated, the supply of skilled labour needs to be increased substantially. 13. The contribution of the HRIP to the economy is primarily to help increase the number of individuals trained in modern industrial technology to meet the demands of industry. This is vital since the Government has set a high target growth rate of 7% to 8% in the medium term and about 10% in the long term in order to raise local incomes comparable with those in the more developed countries in the region. In this growth objective, industry assumes the lead role with Government encouraging foreign investments by providing attractive incentives for investors in the export oriented manufacturing sector. In this growth scenario, the need to supply skilled labour in the numbers that industry demands has become a priority. 14. The project is also to provide marketable skills to the unemployed youth and to school leavers to enable them find gainful employment. The Government has recognized the overseas employment potentials for skilled workers and has been promoting this objective to help reduce local unemployment and significantly improve the earning potentials. In addition, the country could benefit from the substantial inflow of foreign exchange earnings and also to shift the composition of overseas employment progressively from unskilled to skilled labour.

B. Foreign Employment 13. In 2002, Sri Lanka earned $7,435 million from the export of goods and services and from income derived from overseas workers, particularly in the Middle East countries. Foreign remittances amounted to $1,155 million with 16% from the Middle East. According to the Central Bank, 230,629 Sri Lankans found employment in these countries in 2002. The Foreign Employment Bureau estimated that 970,000 worked abroad at the end of 2002. However, most of these employees were engaged in low skill categories such as domestic workers and other similar employment. In 2002, out of the total departures for foreign employment, 108,514 (approximately 50%) were classified as housemaids. In the skilled category, there were nearly 45,000 people, but primarily people in the craftsmen category rather than those with higher skills. 14. Although overseas employment in the skilled categories is relatively small (not exceeding 5,000 per annum), the demand for skilled workers is quite significant. The comparison of job orders and job placements of skilled categories as shown in Table 2 clearly demonstrates the country’s inability to meet the overseas demand for qualified and experienced skilled workers. Over the last three years, Sri Lanka received 70,957 job orders and only about 29,968 or 35% were filled. As most of these categories offer significantly higher salaries, ranging from $400 to $1,000 per month, the opportunity to earn a higher income was lost due to lack of skills among the workers. This has affected the national economy, as the unrealized remittances from such jobs would have been quite substantial. A 2003 tracer survey reports only about 6% foreign employment among those with technical education and vocational training.1 15. A number of factors appear to contribute to the failure to secure foreign employment opportunities in the skilled occupations. The inadequate supply of professionally trained skilled workers in relation to market demands is the key factor. Since advanced technical education and training was introduced only in the 1990’s, the number of skilled workers with formal technical education is limited and most of these people are already employed locally. As highlighted in the tracer survey, about 90% of those employed after training had paid employment while the other 10% were self-employed.2 Of those employed, 55% had permanent jobs, 25% had temporary jobs, while 10% had employment only for a fixed period. Greater in-country employment opportunities for skilled workers appears to be one factor that reduces the need to seek employment overseas.

Table 2: Foreign Job Orders and Departures

2000 2001 2002 Skilled Category Job

Orders Departures Job Orders Departures Job

Orders Departures

Machine Operator 17,476 6,928 15,118 5,912 12,370 7,767 Plant Operator 87 11 89 25 106 24 Technician 4,368 839 4,682 599 2,876 713 Electrician 4,277 587 5,819 663 3,689 900

Total 26,208 8,365 25,708 7,199 19,041 9,404 Source: Foreign Employment Bureau, 2003.

1 Tertiary and Vocational Education Commission, Ministry of Tertiary Education and Training, Tracer Survey Among

Past Trainees of Vocational Training Agencies, Colombo, March 2003. 2 Ibid.

16. Another factor in the inability to secure overseas employment is the lack of English language proficiency. As reported in the tracer surveys, with the exception of National Apprentice and Industrial Training Authority (NAITA) and Sri Lanka Institute of Advanced Technical Education (SLIATE) where English is a formal subject, the other institutions providing technical education such as Vocational Training Authority (VTA), Department of Technical Education and Training (DTET), and National Youth Services Council (NYSC) pay little attention to English communication skills. Although most of the Sri Lankans working abroad, particularly in the low skilled categories, have very little knowledge of the English language, they still seek employment overseas due to lack of local job opportunities. In the case of the skilled workers, their lack of English language skills may also deter them from seeking employment overseas despite the high revenue potentials when compared with local salaries and benefits. C. Labour Force Characteristics 17. The third objective of the Government policy on technical education and vocational training is to create productive employment. The labour force in 2002 was estimated at 7.1 million,3 representing about 37% of the total population of 19 million at the end of 2002. The population growth rate has declined to about 1.2% with a corresponding decline in the net addition to the labour force. This has not helped ease the unemployment problem. Unemployment is the most critical issue in the economy with an official rate of 9%. In addition, about 1.3 million workers classified as employed actually belong to the underemployed category.4 It should be emphasized however that unemployment went down from as high as 16 percent in the early 1990s to about 9.2% in 2002. Accordingly, ADB notes two of the principal reasons for this trend: (i) increase in the government service, and (ii) increase in the requirements for security purposes. However, neither is seen as being sustainable because of its severe fiscal impact, and it is not consistent with the emerging peace agenda in regard to increasing the size of the public sector, especially its military forces. At the same time, current and emerging prospects in overseas employment may no longer be as vibrant as in the past to ease domestic job pressure. Presently, it is estimated that about 750,000 Sri Lankans are working in the Middle East. This represents close to about 11% of the labour force. Yet many do not have the technical qualifications that overseas jobs require. Domestic job demand may increase as overseas workers return home as a result of the continuing peace and therefore contribute to increasing the local labour supply. 18. Most people who are classified as unemployed have educational qualifications above the 5th Grade. Those with General Certificate of Education Ordinary Level (GCE O-L) still accounted for 25%, a marginal decline from the 31% in 1990, while those unemployed with GCE Advanced Level (GCE A-L) increased from about 15% to 25% over the same period. Those unemployed with Grades 5–10 educational attainment remained stable at around 45%. In the 1970s and 1980s, over 80% of the unemployed held educational qualifications of less than Grade 10, but now the problem has shifted to those with higher educational standards. More than 51% of unemployed persons have attained educational qualifications equivalent to GCE O-L and above. GCE O-L graduates tend to go into trades training and then find employment. GCE A-L graduates are less likely to master skills consistent with employer demands as their objective is university study and managerial work.

3 The 2001 Census reported a population of 16.8 million only for the eighteen districts. It did not cover the eight

districts in the North and East due to security problems. The Central Bank estimates the population for the entire country as 19 million at the end of 2002, including the eight districts.

4 Government of Sri Lanka, Regaining Sri Lanka: Vision and Strategy for Accelerated Development, December 2002.

19. The emerging unemployment trend appears to reflect several key problems. First is the lack of economic diversification to generate a demand for semi-skilled workers. Second is the inadequacy of skills of the unemployed when compared with the available jobs in the private sector. Third are the low wages that employers pay for jobs at the entry level. This discourages unemployed youth from considering such job openings. Fourth is the emergence of the unemployed educated female sector as an important issue. Fifth is the reluctance of university graduates to accept employment in skills based occupations even when such employment offers higher pay than entry-level managerial jobs. 20. With the changing structure of the economy, the demand for skilled workers as well as the composition of the employment sector is changing and the traditional sources of employment can no longer provide employment at present or in the future. For example, the employment share of agriculture declined progressively from 42.5% in 1990 to 34% in 2002. This means that agriculture no longer has the potential to absorb new labour without further reducing agricultural productivity. Already the dependency on agriculture has far exceeded its capacity and as a result there is a high degree of underemployment in agriculture and agriculture-related activities. The labour force that traditionally sought employment in the agricultural sector is now seeking employment outside this sector, particularly with increasing educational standards in the rural sector. 21. Although the shares of manufacturing, transport, and trade have marginally increased over the same period from 14.7% to 16.8% and from 31.0% to 32.9%, respectively, the employment growth in these areas is inadequate to provide employment to the under-employed and the unemployed. The decline in employment opportunities in agriculture as well as the increasing demands from the female labour force is creating further pressure to expand employment opportunities in the manufacturing and other related fields. The Government is addressing this through a combination of short- and medium-term strategies. As a short-term solution, the Government is exploring the possibility of expanding foreign employment in the technical occupations. Over the medium term, the Government’s development strategy places a high priority on manufacturing-based growth with increased foreign investment. However, both strategies require the availability of a highly trained labour force. In particular, securing the available jobs overseas will remain difficult due to the lack of relevant skills in the labour force. Similarly, the shortage of workers who possess a strong training in higher-level skills is a serious constraint in attracting foreign investment in manufacturing. Accordingly, both strategies require the presence of a pool of a highly qualified labour force. D. Post-Secondary Education and Skills Development

1. Education and Training Systems 22. The education system in Sri Lanka is generally divided into four levels: Primary (Years 1–5); Junior Secondary (Years 6–8); Senior Secondary (Years 9–11), and Collegiate (Years 12–13). Students sit for the GCE O-L and GCE A-L examinations after Year 11 and Year 13, respectively. Passing the GCE A-L examinations with passes in the required subjects in one sitting is a requirement when taking the examinations for university admission. Normally, the entry level for TEVT programs, such as craft courses, is a pass of the GCE O-L examination while a pass of the GCE A-L examination with passes in required subjects for programs leading to national diplomas and a degree in technical/technological education. On the other hand, basic vocational training programs cater to those who have done their junior secondary education (Grade 9) and other school-leavers. Appendix 2 illustrates the education and training

systems, including the various streams and options towards obtaining post-secondary technical education and training.

2. Limited Opportunities for Higher Education 23. The Sri Lankan education system is geared to the supply of entrants to the country’s 13 universities and their affiliated institutions. The free access span of schooling ends with the GCE O-L examination held after 11 years of schooling. Complete university orientation in education begins at Grade 12 where eligibility requirements for admission based on performance at the GCE O-L apply. The two-year span of schooling in Grades 12 and 13 ends with the GCE A-L examination which serves as the highly competitive university admission test. The number of students who are eliminated through the selection process to the universities is high. For example, in 1998 the number of the school students who sat for the GCE O-L was 353,372 and only 132,255 or 37.4% qualified to enter Grade 12. The number who did not get the opportunity to go beyond the GCE O-L amounted to 221,117, or 62.6%. Some of these students are likely to try again, but the majority are unlikely to succeed beyond this level. 24. The period of study for GCE A-L is two years and those students who entered GCE A-L in 1999 would have sat for this examination in 2001. The number who qualified for university admission in 2001/2002 was 86,655 and the number who entered the university for the 2002/2003 period was only 13,035.5 In summary, out of the 353,372 students who sat for the GCE O-L in 1998 only 24.5% qualified for university admission in the 2001/2002 period and only 3.7% actually received university admission. 25. Another 50,000 to 60,000 students enrol in other vocational training programs offered by both public and private sector institutions. About 10,000 students either leave the country for overseas education or join various private sector institutions affiliated with foreign universities. Some of those who were not qualified for university admission and those who could not pursue further education through other sources find employment in public or private sector companies or undertake self-employment. The number of students left out of the education system and who are not employed could be around 250,000 to 300,000 per annum. The official estimates of the annual addition to the labour force do not appear to reflect the true number of workers in the country. 26. While there is a backlog of unemployed graduates numbering about 27,000,6 industry still complains about the lack of skilled employees to meet its current needs. The Government’s development efforts to increase growth performance, starting with the manufacturing sector and securing more foreign employment opportunities for its skilled workers, will require a shift in educational priorities towards a more advanced technical education and vocational training system.

3. Post-Secondary Education is Underdeveloped 27. Post-secondary education in Sri Lanka is under-developed. By operational definition, post-secondary education usually includes study programs that require at least a GCE O-L qualification with a duration of one year or more lead to a national certificate. Those programs 5 Statistical Handbook, Research and Development Branch, Department of Examinations and University Grants

Commission, Academic Year, 2002/2003. 6 The Government with the assistance of the World Bank has launched a project to retrain unemployed graduates to

make them employable in the private sector.

requiring a GCE A-L qualification last from one to four years and lead to a national diploma in technology (or a national diploma in engineering science or a higher national diploma). There are about 60 technical colleges and advanced technical institutes, mostly operated by the Government, offering post-secondary programs, which are very traditional and almost identical. The private sector is not keen in investing in this field due to the unstable political environment vis-à-vis the considerable infrastructure and capital requirements. Private higher education is in a state of uncertainty, hence, what is flourishing are ad hoc arrangements with foreign universities and institutions through affiliations to offer post-secondary programs including degree programs, which are generally expensive, draining the already limited foreign currency reserves and aside from the fact that most of these programs are not nationally recognized. This is the outcome when higher education is not yet privatized or devolved as compared with similar educational systems in most Asian countries.

4. Poverty and Social Dimensions in relation to TEVT

a. Poverty Dimension 28. Sri Lanka with its per capita GDP of less than $1,000 is a low-middle income country with a significant share of poverty. For a large proportion of the population, wide disparities in income distribution aggravates the effects of a generally poor economic situation. At least 25% of the country’s population is below the defined consumption poverty line. The poverty level is above 40% in rural areas, highland plantation districts and the conflict affected North and East districts. Sri Lanka’s industries and services are customarily concentrated in the Western Province, where the incidence of poverty is the lowest (14%). The percentage of poor in the other provinces is relatively high: Uva 37, North Western 34 Sabaragamuwa 32, North Central 31, Central 28, and Southern 26 percent.7 As such “income poverty is primarily a rural phenomenon in Sri Lanka with approximately 85% of poor households located in rural areas whereas the total rural population is around 75%.”8 29. The egalitarian education policies pursued by successive governments over five decades or more has resulted in the poor and rural youth having a near equal share in the outcomes of education. As such, a large proportion of those who qualify for university admission at GCE A-L examination are poor and rural youth. As indicated, only about 13,000 of the 80,000 qualifying for admission are eventually admitted to the universities. Out of the balance of nearly 70,000, those obtaining placement in fee levying tertiary institutions in Sri Lanka and abroad for further education, come from relatively affluent families. Employment with GCE A-L qualifications in better paid private sector positions are also secured by those from the same group on account of their higher social status and competency in English. Therefore, despite the equal opportunities provided in education, even a larger proportion of those qualifying for university admission and remain unemployed are the poor and rural youth. As such, any intervention to secure gainful employment for the GCE A-L qualified, through the provision of ‘in-demand’ higher-technical skills will go a long way in reducing their unemployment. The impact on poverty reduction and economic growth will also be significant since several thousand, who would otherwise be dependent on other income earners, will become direct contributors to the economy. This approach fits well with the Government and ADB Poverty Reduction Strategy for Sri Lanka, which suggest that pro-poor economic growth is central to poverty reduction.

7 Department of Census and Statistics, Household Income and Expenditure Survey 1995/1996, Colombo. 8 World Bank Country Report for Sri Lanka, 2000.

b. Gender Dimension 30. The consistent egalitarian educational policies not only reduced urban-rural and poverty related disparities but eliminated gender-wise disparities in the primary and lower-secondary segments of schooling. Yet, during the last decade, labour force participation has remained at about 33% for women and 67% for men. An analysis of employment by sector reveals that women workers are found in significant numbers in relatively few sectors of the economy whereas men appear to have far more diverse employment opportunities. A significant feature is a female concentration in key exporting industries such as garments (nearly 90% of the workforce in the garment sector consist of women), textiles, pottery, china and earthenware and jewellery manufacture. In the upper secondary segment more girls are enrolled and in the GCE A-L grades the enrolment of girls is as high as 60%. But the proportion of unemployed females with educational attainment GCE A-L is 16.6% for males and 40% for females while for those qualified as GCE O-L the unemployment rate is 22.7% for men and 23.9% for females. 31. In enrolment in the Technical Education and Vocational Training (TEVT) sector, there are some gender imbalances exist but generally, they are not unfavourable to women. For instance in SLIATE, enrolment of women is more than 50%. There is a definite trend in increase of female enrolment in engineering courses from 25% in 1998 to 39.2% in 2002. A comparison of enrolment figures of DTET and SLIATE also reveal that enrolment of women is higher where minimum qualification requirement for admission is GCE A-L. Appendix 3 gives more details on the analysis of the poverty and social dimensions in relation to TEVT.

5. Existing Capacity in TEVT

a. TEVT Providers and Operators 32. There are about 1,421 TEVT institutions. These consist of 379 statutory bodies, 209 government institutions, 350 private institutions, 128 NGO institutions, 334 institutions under the Ministry of Tertiary Education and Training (MTET) and about 21 institutions for special purposes. A range of ministries and departments are involved in TEVT, either as part of their mandated functions or as an objective to serve their respective sectors. For example, the Ceylon-German Technical Training Institute (CGTTI) and the Sri Lanka German Railway Training Institute (SLGRTI) form the training arms of the Ministry of Transport to produce trained manpower for the transport industry. The National Youth Services Council (NYSC) under the Ministry of Sports and Youth Affairs has a Training Division for the provision of vocational training to school dropouts to ensure the full development of the youth. Other ministries that have similar training functions are the Ministries of Industry, Health, Science and Technology, Agriculture, and Employment and Labour. The overlap of mandates and the fragmentation of resources are almost as pervasive as the inadequacy of facilities and the supply-driven focus of their programs. Appendix 5 gives the distribution of these institutions by district. 33. MTET has a network of major public sector providers of TEVT, which includes the Sri Lanka Institute for Advanced Technical Education (SLIATE), the Department of Technical Education and Training (DTET), the Vocational Training Authority (VTA) and the National Apprentice and Industrial Training Authority (NAITA). Most of them are corporate bodies with separate and independent governance, diverse organizational structures, duplicative functions and resources, and supply-oriented and overlapping programs. They operate a total of 334 TEVT institutions, which are located all over the country. Appendix 4 provides the provincial and district distribution of these TEVT institutions.

34. There are a fast growing number of private training providers offering TEVT courses related to information technology. They award an assortment of certificates and diplomas with no assurance of quality or national recognition. There appears to be a tremendous variation in quality from outstanding to abysmal. This may compound the unemployment situation and discourage the youth from pursuing TEVT programs. By law, the provision of TEVT by the private sector and by non-Governmental organizations requires registration, accreditation and approval by the Government through the Tertiary and Vocational Commissions (TVEC). So far, only 252 private TEVT institutions are registered with the TVEC. There are huge gaps in the enforcement of the present system, which need to be remedied before consistent quality becomes possible. There are no professional associations such as private accrediting bodies for quality control and peer or professional evaluation of institutions and programs. This situation poses some difficulties such as in determining the supply capacity of the private sector for TEVT planning and policy formulation. It has been noted that despite the variations in quality, employers appear to favor graduates from private sector institutions over those from the Government institutions.

b. Training Capacity and Outputs of Major Public TEVT Providers 35. The training capacity of major public TEVT providers totalled 66,034 students in 2002 including enrolment in vocational courses, crafts-level and technician diploma programs. Although the annual student admission figures show a gradual increase in the last five years, the dropout rate is significantly high ranging from 21% to 26%. This can be ascribed to the low social perception of TEVT, the lack of proper career guidance in the choice of courses, the sheer poverty of the population, the loss of motivation due to the dismal quality of instruction and training places, as well as student unrest. The intake capacity is not met when compared to the yearly student admission. Table 3 presents the training capacity of the major public TEVT providers over the last five years.

Table 3: Enrolments in Major Public TEVT Providers, 1998–2002

Major Providers

Year 1998

Year 1999

Year 2000

Year 2001

Year 2002

SLIATE 4,217 5,029 6,618 6,017 6,559 DTET 16,326 17,321 17,345 16,263 17,850 VTA 15,426 20,992 18,927 27,406 25,290 NAITA 21,957 22,920 18.402 15,490 16,335

Total 57,926 66,262 61,292 65,176 66,034 Source: Data collected from major public TEVT providers concerned. 36. The total pass-outs in 2002 reached 32,813 as compared to 26,592 in 1998. The annual pass-outs averaged to 33,070, which denote that there was no significant increase in the training output for the last five years. In fact, the training output of NAITA is showing a gradual decline. Table 4 presents the pass-outs in the last five years.

Table 4: Training Outputs of Major Public TEVT Providers, 1998–2002

Major Providers

Year 1998

Year 1999

Year 2000

Year 2001

Year 2002

SLIATE 258 317 389 403 385 DTET 4,119 4,997 5,856 5,512 5,528 VTA 13,404 21,063 19,115 24,726 20,655 NAITA 8,811 10,726 6,432 6,552 6,245

Total 26,592 37,103 31,803 37,293 32,813 Source: Data collected from the line agencies concerned.

c. Output in Technological Education 37. Technological education is relatively new and still under-developed in Sri Lanka. Although it dates back as early as 1985 when the first technician institute was established at NAITA, most of the higher technical education institutions were only established from 1996 to 2000. One major reason for the under-development is the large investments needed to put up such facilities. Even the private training providers are incapable of assuming a greater role in its provision. Presently, only four post-secondary higher technical institutions are engaged in the development of higher-level technical skills, namely: SLIATE, ITUM, NAITA and OUSL. Even ITUM and OUSL-FET share laboratories and workshops with their respective Faculties of Engineering. Only one ATI under SLIATE is offering an HNDE program. At this stage, the intervention of the Government is important to accelerate the development and promotion of the technological education system as an alternative career path towards a more rational human capital formation for socio-economic growth. 38. To date, about twelve technologies and specializations are offered in existing technological institutions, with different durations and modes of deliveries, as follows: Civil, Chemical, Computer, Electrical, Electronic and Communication, Manufacturing, Marine, Mechanical, Nautical, Polymer, Textile and Clothing, Information Technology and Agricultural Technology. A good number of the technologies offered are traditional and redundantly implemented by each institution. There is a need to introduce new and emerging technologies to arrive at skill-based competitiveness and to improve the external efficiency of the technological education system. 39. The yearly output of the above-named four institutions in 2002 totalled 649 out of a total intake of 2,915 students, a figure which is extremely low, and is due mainly to the physical and technical limitations of existing facilities. On average, the annual total output of each institution is about 163 technician-graduates, which is definitely way below the labour market requirements for higher-level skills. Even the present capacity of SLIATE for its HNDE program is about 126 pass-outs. The training output for higher-level technical skills is disproportionately low, as compared with the enrolment in crafts-level and operator courses. The ratio is about 1:50 to crafts-level skills. This ratio is highly inefficient and is quite far from the normal proportion, which is about 1:5–10. Table 5 shows the student intake and pass-outs of the four technological institutions in the country. 40. There is a bottleneck in meeting the needs for trained technicians. The production level for technicians by the existing delivery system is extremely low. Earlier, it was calculated that the present training output ratio by public TEVT providers is 1:50 for crafts and operator-level workers. The classical ratio of engineer, technician and skilled workers for a developing economy is about 1:5:25. Presently, this is far from being met and the present skills of the

available labour force are not ready to move forward to an industrializing economy without first achieving skill-based competitiveness. Figure 1 (next page) attempts to illustrate the manpower structure of a developing economy like Sri Lanka which is aiming to move to an industrializing economy to catch up with neighbouring Southeast Asian countries, i.e., Singapore and Malaysia.

Table 5: Student Intake and Pass-Outs in Technological Institutions, 2002

Institution Number of

Technologies offered

Duration (in years)

Annual Student Intake

Number of Pass-outs

NAITA 3 4 300 175 SLIATE 3 3 1/2 265 126 ITUM 9 3 350 275 OUSL 8 4 2,000* 73**

Total 2,915 649 Source: Data supplied by the institutions concerned, 2002. *58 enrolled in B. Tech **12 graduates of the B. Tech 41. There is a bottleneck in meeting the needs for trained technicians. The production level for technicians by the existing delivery system is extremely low. The participation ratio with respect to the labour force, totalling seven million, and more than 3,500 registered industries and BOI projects would be irrational. Earlier, it was calculated that the present public training output ratio for technicians and crafts-level workers is 1:50. The classical ratio of engineer, technician and skilled workers for a developing economy is about 1:5:25. Presently, this is far from being met and the present skills of the available labour force are not ready to move forward to an industrializing economy without first achieving skill-based competitiveness. Figure 1 (below) illustrates the manpower structure of a developing economy like Sri Lanka, which is aiming to move to an industrializing economy to catch up with neighbouring Southeast Asian countries, i.e., Singapore, Malaysia, and Thailand.

Figure 1 Workforce Structure Model

Engineers Technicians Skilled Workers

Model 1: Developing Economy Model 2: Industrializing Economy

42. It can only be surmised that some private sector providers have their nominal share in higher-level skills training, mostly for IT personnel, through their affiliated programs with foreign training institutions. However, it is clear that the present capacity in developing higher-level technical skills is extremely weak and incapable of responding to private sector requirements and global competition. Appendix 6 provides an overview of the TEVT sector.

d. Staffing Pattern of Major TEVT Providers 43. There are difficulties in attracting qualified and motivated teaching staff. For example, in 2002, a total of 1,951 teaching staff are in place out of 3,132 positions available or about 62% of allocated posts for the four major TEVT providers. An analysis of the staffing pattern for the last 5 years indicates that filled positions averaged 61%, which could be either attributed to lack of interested and qualified applicants or difficulty in filling positions due to rigid government policies and procedures. For this reason, a lot of visiting or part-time staff is hired to augment the existing academic staff. This has become a common alternative, which adversely affects the quality of training delivery and outcomes.

e. Unit Cost of Training Technician 44. Fiscal year 2002 data from SLIATE has been used to calculate the per student cost of technician education. The total recurrent expenditure and depreciation totalled SLRs135.9 million and with 4,479 registered students in all 11 SLIATE institutions; the average cost was around SLRs30,349 per student. However, the overall average cost per student does not distinguish per student cost of technology related programs from non-technology related programs. Most of the technology programs incur higher costs since they use expensive equipment and machinery and other teaching materials as teaching aids. As a result costs related to the head office administration as well as annual depreciation are higher in relation to technology related programs. However, cost data available from SLIATE cannot be separated by institutions to provide an estimate of per student cost of different programs offered by different institutions of SLIATE. 45. In the absence of disaggregated data, an alternative approach has been developed to provide an estimate of per student cost. This approach first separates direct and indirect costs by institutions, as this information is available from SLIATE. Direct cost per student by institution is then taken as the ratio of the sum of per student cost of all 11 institutions to allocate both head office expenditure and depreciation per student by institution. Although there are shortcomings of this approach, there is no other mechanism to calculate per student cost in the absence of disaggregated data on head office expenditure and depreciation. Both these categories are closely related to direct costs than to indirect costs. Using direct costs as a proxy, therefore, provides a reasonable alternative to allocate head office expenditure and depreciation per student and by institution. Appendix 7 gives the computation details. 46. The estimate of per student cost varies across 11 institutions. The highest per student cost in 2002 has been in Ampara with an estimate of SLRs141,074 while the lowest cost of SLRs12,277 has been accounted by Jaffna. Among the institutions with high per student costs, Ampara, Naiwala and Labuduwa clearly stand out. All three institutions have low student registration and low utilization of existing facilities. The estimate of average per student cost in Mattakuliya is SLRs46, 662 and it under-estimates the average per student cost due to high enrolment with limited facilities. 47. Although it is difficult to suggest an exact estimate of per student cost in technology studies due to serious limitations of existing data, it appears that about SLRs75,000 per student would be sufficient to provide a program in advanced technology by any institution with an annual intake of 300 or a total of 600 students in first and second year programs. In comparison with the cost of SLRs200,000 of a two-year program in clothing, this estimate appears comparable. In the SLIATE estimate about 40% accounts for wages and salaries of lecturers paid by the Government while in the private sector they are paid from student fees. In the

private sector salaries paid to lecturers are higher, facilities provided to students are much better and, more importantly, a return to investment for services is anticipated. If the estimate is based on the private sector costing method, the difference between the private and public sectors per student cost is likely to be marginal.

6. Needs Assessment of TEVT in the North and East 48. The International Labour Organization (ILO) undertook a need assessment on employment and skills training needs for the Sub-Committee on Immediate Humanitarian and Rehabilitation Needs in the North and East in 2003.9 The report provided an assessment of training needs as well as an outline of actions on skills training in the conflict-afflicted areas for the short-term as well as the medium-term strategy.

a. General Assessment 49. The armed conflict has seriously affected the skills acquisition in the North and East. The major public training providers such as VTA, DTET, NAITA and SLIATE have not provided services as much as in the Western Province and the training provided by NGOs lack national recognition for want of proper certification. On the whole, the conflict has seriously constrained the skills acquisition process resulting in a dearth of skills at all levels.

b. Training Needs 50. The afflicted areas are primarily agricultural and dominated by small farmers and the informal economy. Manufacturing and services are in the form of small and medium enterprises and micro-enterprises. The immediate surge in employment is seen largely in the construction industry. Road construction would require engineers, surveyors, lab technologists, draughtsman, supervisors, heavy equipment operators and skilled workers. There is an inclination to recruit these technical personnel from other provinces and foreign sources. The available option is for the TEVT system, in the immediate term, to mount apprenticeship arrangements in advanced technical and crafts-level training in these areas.

c. Outputs of the School System: North and East 51. In 2002, a total of 62,522 students joined the labour force from various points of the school system. Presently, a large number are reported to be unemployed. Annually, almost 12,000 GCE A-L qualified youth are available for non-university tertiary education. Both the equity principle, and market demand in the medium term, point to the need for training in advanced skills for these areas with GCE A-L graduates. Table 6 gives an idea of the youth requiring various kinds of skills training for employment access and accelerated rehabilitation of the conflict-affected areas.

9 ILO, Improved Employability through Skills Training, March 2003.

Table 6: Number of Students at Various Exit Points of the School System in the North and East

Level North East Total Student up to Grade 10 2,531 7,225 9,756 Student up to GCE O-L 11,757 9,542 21,299 Student with GCE O-L 8,688 11,034 19,722 Student with GCE A-L 6,721 5,024 11,745

Total 29,697 32,825 62,522 Source: ILO Report, 2003

d. Role of Private Sector and NGOs in Training 52. Private TEVT providers in the conflict areas are largely engaged in computer education and business studies which are less capital-intensive but lucrative. The lack of financing is one of the constraints faced. The extra-legal tax system is another mitigating factor to private investment in TEVT. The Human Resource Endowment Fund (HREF) is to provide an incentive package that will promote competition among public and private providers as well as to encourage public-private partnership through arrangements to buy training places that are critically needed in reconstruction projects. 53. About nine non-governmental organizations (NGOs) are engaged in basic and craft level training which is largely in the fields of Agriculture, Dress Making, Entrepreneurship, Construction trades and others. Their coverage is considered minimal in view of the large clientele. This is due to a lack of recognition of the training offered as a result of the lack of enforcement for a nationally accepted testing and certification systems.

e. Strategies for Skills Training 54. Some of the multi-front strategies to build a skill base in the North and East to support speedy rehabilitation and revival of the economy are as follows:

(i) strengthening institutional capacity for planning and management of skills training,

(ii) training new entrants to the labour force and upgrading the skills of existing employees,

(iii) integrating vulnerable/disadvantaged groups into mainstream skills development programs,

(iv) promoting public-private NGO partnership for demand driven skills training, (v) improving the quality and relevance of existing training programs, and (vi) improving the facilities of TEVT institutions.

7. External Efficiency of Public TEVT

a. Social Demand of TEVT Courses

55. One indicator of external efficiency of TEVT programs is the social demand for courses offered in TEVT institutions. The social demand for craft-level courses at DTET indicated a ratio of 1:3, which means that three students apply for a seat for admission in any given course. On the other hand, the social demand for Higher National Diploma in Engineering (HNDE) courses at SLIATE was about 1:7. Yet, the social demand does not necessarily indicate that there is an

economic demand of skills for these courses. In fact, most of the courses are not market-oriented, thus, resulting in an oversupply of skills, which do not match labour market demands.

b. Tracer Study of Technical College (TC) Graduates 56. As indicated, a tracer study of technical college graduates involving those who had followed courses for the award of National Certificates, National Certificates in Engineering Craft Practice and Certificates of one and two years was carried out.10 A total of 2,732 out of 4,402 graduates participated in the survey, which covered 20 occupations including those in commerce and business. Twelve of these are in engineering and industry-related fields. 57. The survey was aimed at collecting information on: (i) the extent to which the technical college graduates are employed in fields they had been trained; (ii) the profile of self-employed graduates; (iii) the time lag between completion of training and employment; (iv) the relevance and adequacy of training for competences required in work contexts; and, (v) the quality of technical college graduates relative to industry demand. The relevant findings are summarized below. 58. The overall percentage of employment of graduates is 55% in the combined category of wage employment and self-employment, with 49% in fixed wage and 6.1% in self-employment. The unemployed comprise 34% with 11% of these engaged in various part-time activities. The sectoral employment of technical college graduates is: 46.6% in the private sector, 32.6% in the government sector, and 13.3% in statutory bodies. 59. Compared with national labour force trends of 2000, the year in which the data was collected, the technical college graduate employment in the private sector is slightly higher than the national average (43.2%), significantly higher in the government sector relative to the national average (13.6%) and significantly lower in self-employment for which the national average is 27.6%. 60. Of the total number employed 84% are employed in their respective fields of training. Of the courses selected for the study, the Machinist, Electrician and Draughtsman Courses have over 70% employment in the combined category of wage-employment and self-employment in their respective fields. The corresponding figure is over 60% in 10 other courses and over 55% in 2 other courses. 61. Approximately 12.4% of the sample is self-employed in the two categories: “fulltime” and “additional to principal employment.” Technical draughtsman is the occupational group record the highest number of graduates (37.8%) in self-employment. Electrical engineering technician is the next highest group with 18.6% unemployed. The reason given for being unemployed among those intending to be self-employed is “failure to obtain employment in the government sector.” The lack of capital, difficulties in marketing and insufficient knowledge are the core difficulties encountered by technical college graduates in self-employment. 62. A majority of technical college graduates (69.7%) in the 12 industry and engineering related occupations found employment in less than one year from the date of release of results while 15.3% had to wait for more than two years. The balance of 15.0% found employment after a waiting time of 1 to 2 years.

10 Department of Census and Statistics and National Education Research and Evaluation Centre, University of Colombo, A Tracer Study of DTET Graduates in 1995/1996 e, Colombo, August 2002.

63. The income from employment of the majority of technical college graduates (52.9%) is in the highest income category of more than SLRs5,000; 32.7% are in the middle income category of SLRs3,000 to SLRs5,000, and only a small percentage is in the lowest income category of less than SLRs3,000. 64. A vast majority of technical college graduates (70.2%) perceived their training as relevant for their present job. The balance (29.8%) perceived their training as not at all relevant to their present job. Also, 59.2% indicated that their training was adequate while 49.8% indicated that it was inadequate. The fact that 29.8% of the graduates have categorically stated that the training received is 'not at all relevant' to the job they hold, and that the training is considered as 'not adequate' by 40.8%, points to a mismatch between the training and industry demand. This is a cause for concern particularly as only 16.1% of those who are employed (in the combined course category), are employed outside of their area of training. Therefore, it can be surmised that a majority of those who have commented negatively on both the “relevance” and “adequacy” dimensions of courses they followed, are employed in the fields in which they have obtained training. 65. In this study, a sample of 22 employers each having on technical college graduate in employment for periods ranging from less than one year to over five years responded to queries regarding their employees training. The majority of employers (64%) were positive to the queries of whether the employee's training at point of entry was “adequate” for the work entrusted, and whether she/he perceived such training as an outcome from their technical college course. However, a similar percentage of employers indicated that they had to provide on-the-job training to the employees, but the training was facilitated by the technical courses the employees had followed. 66. A subsequent query on whether the previous training of the employee is adequate for the tasks she/he is entrusted with, elicited a slightly higher (68%) rate of affirmative response from the employers. 82% of the employers agreed that the employee made a positive contribution to the institution's productivity. The perceptions of graduates on the relevancy and adequacy dimension of courses offered by the TCs, is corroborated, by and large, by the sample of employers. 67. Some of the comments of the employers who had to provide on-the-job-training to the employee were: “inadequacy of training”, “sufficient theoretical knowledge but inadequate practical training”, “had to provide training in other areas”. These specific comments corroborate the responses of the graduates themselves. A couple of employees indicated that the graduate they employed is working in a different field and therefore needed specific training. 68. The affective domain queries of “does the employee work to the best of his/her ability”, “report to work satisfactorily”, received a 100% positive agreement from the sample of employers. The negatively worded queries of “whether the employee shirks duties”, “conflicts with management or resorts to union action”, were answered in the negative by all employees. Employee's job satisfaction was rated positively by 91% of the employers with 77% of the employers reporting that their employees were satisfied with their remuneration. Employer responses indicate a very positive work ethic and orientation demonstrated by graduates.

c. Tracer Study of Past Trainees of Public Vocational Training Agencies (VTA)

69. A similar tracer study of past trainees of public vocational training agencies, namely: NAITA, VTA, DTET, NYSC and CGTTI, was done for those who have undergone training courses in Motor Mechanism, Computer and Office-related occupations.11 The survey covered 645 respondents from a total of 786 samples with a population of 2,310 former trainees who have completed courses ranging from six months to four years in duration. The survey was aimed at collecting information on the employment status of former trainees of the above-mentioned training agencies, the salary levels, nature of jobs and time lag before getting a job, including feedback on the weaknesses and strengths of the training systems. 70. The rate of employment was as high as 84% among trainees from CGTTI, 77% from NAITA, 55% from DTET and 51% from VTA. About 90% of respondents are on paid employment whereas the rest were self-employed. More than 62% were working in the private sector and the remaining was evenly distributed between the public sector and the non-Governmental organizations. Majority of them obtained permanent jobs while a good number only had temporary jobs. 71. About 67% of the respondents received a monthly income ranging from SLRs5,000 to over SLRs9,000. Trainees from CGTTI appeared to have a higher income level than the graduates of the other four training institutions followed by the trainees from DTET. VTA trainees appeared to have the lowest incomes. 72. About 78% of respondents obtained employment with a time lag of six months after completion of their training. About 16% found employment from six to twelve months from the completion of their training. Majority of the respondents agreed that their training was relevant to their current jobs. On the other hand, about 48% of them also indicated that the training received was not relevant to their current jobs. 73. The respondents evaluated several aspects of the training system. Over 52% of respondents indicated that the training allowance paid was not satisfactory. Some commented that their further training experience and also expressed dissatisfaction over their training equipment and materials. More than 70% of the respondents stated that the instructors were unprepared to teach when they entered their classrooms.

8. Survey and Studies Undertaken 74. There were three survey and studies undertaken in this TA to determine current issues and future directions of the TEVT system. These included (i) labour market survey, (ii) study on national skills development policy and (iii) study on restructuring plans for the TEVT system. The salient findings of these survey/studies and other trigger points for repositioning TEVT were recapitulated.

a. Labour Market Survey 75. A labour market survey was conducted for 204 establishments in a sample of five districts including Colombo, Gampaha, Galle, Kurunegalle, and Kandy for 11 industry sectors.

11 Tertiary and Vocational Education Commission, Ministry of Tertiary Education and Training, Tracer Survey Among

Past Trainees of Vocational Training Agencies, March 2003.

These industry sectors are as follows: Food and Beverages, Rubber and Plastic, Leather and Footwear, Textile and Garments, Gem and Jewellery, Electrical and Electronics, Chemical and Metal Fabrication, Information and Communication Technology, Hotel and Tourism, Automobile Engineering and Construction.12

i. Projected Demand for Employment for 2007 76. Employment Demand by Industry Level for 2007. The demand for employment at industry level for the year 2007, based on the stock of employment in 2002 and the calculated sector-wise employment growth indices is presented in Table 7 The figures in parenthesis represent the industry sector with shrinking employment.

Table 7: Estimated Employment Demand by Industry Level for Year 2007

Employment Change 2002-2007 Industry Sector per cent increase

for 2007 Stock for

2002 Increase for

2007 Stock for

2007 Agriculture, forestry & fishing 1.68 2,247,605 37,741 2,285,346 Manufacturing 35.88 1,073,377 385,154 1,458,530 Construction 36.45 286,544 104,454 390,998 Trade and hotel 46.86 838,797 393,028 1,231,826 Transport, storage and communication 13.21 309,202 40,838 350,041

Insurance and real estate 61.56 168,974 104,028 273,002 Personal/govt. service 14.45 123,767 17,885 141,653 Others, Mining and Quarrying, etc. (9.37) 1,471,157 (137,807) 1,333,350

Total 14.39 6,519,423 938,436 7,457,860 Source: Department of Census and Statistics. Quarterly Labour Force Survey, 2002. 77. The projected increase of employment in the industry sector will be from 6,519,423 in 2002 to 7,457,860 in 2007 or an aggregate increase of 14.4% for the five-year period. Across all sectors, the yearly demand for employment will be about 187,688. 78. Employment Demand by Occupation Level for Year 2007. The employment growth at industry level can be allocated among different occupational groups using the industry-occupation coefficient matrix of 2002. The estimated employment demand by occupational level for the year 2007 is given in Table 8. It can be gleaned from the table that the projected employment demand in 2007 for technicians and other paraprofessionals will be about 56,257, or an annual average of about 11,252. This represents 16.5% of the total employment demand. Of this estimate, about 49,935 will be physical and engineering paraprofessionals.

12 The labour market survey was undertaken by Ernst and Young for ADB TA 4090, February 2004.

Table 8: Projected Additional Employment by Occupation Level for Year 2007

Occupational Group In 2002 In 2007 Extra Demand in 2007

1. Senior Officials, Managers 83,260 108,749 25,489 2. Professionals 358,620 385,014 26,394 3. Technicians and Associate

Professionals 332,546 388,803 56,257

4. Clerical & Related Workers 253,966 316,241 62,275 5. Sales & Service Workers 496,435 779,714 283,279 6. Skilled agricultural and fishery workers 1,599,867 1,632,244 32,377 7. Craft and Related Workers 991,090 1,296,296 305,206 8. Plant and Machine Operators &

Assemblers 393,888 459,616 65,728

9. Elementary Occupations 1,690,151 1,799,692 109,541 Total 6,519,425 7,457,861 938,436

Source: Department of Census and Statistics. Quarterly Labour Force Survey, 2002. 79. In addition, the employment demand for craft and related workers and plant and machine operators and assemblers will be 305,206 and 65,728, respectively, which accounts for nearly 70% of the total employment demand. It will be expected that those pass-outs from the 10 colleges of technology will compete in a wide spectrum and ranges of jobs including craft-level and skilled operators’ categories before finally assuming key and middle-level positions in industry.

ii. Present Stock and Participation Rates of Skilled Workers and Technicians

80. The present stock and participation rate of skilled workers and technical labour force in the selected samples by the respective industry sectors is presented in Table 9. With respect to the population and employment, the participation rate is highest in the rubber and plastic (66.85%) followed by automobile engineering (45.26%), telecommunication/ ICT (45.06%) and the construction (44.20%) sectors with the food and beverages (11.04%) sector as the least employer of skilled and technical workers. Overall, the participation rate ranges from about 11% to 67% or an average of 34%. Also, the participation of present stock of female workers is mostly seen in the textile and garments and rubber and plastic industry sectors.

Table 9: Present Stock and Participation Rate of Skilled and Technical Labour Force Present Manpower Stock Sector

Male Female Total Present Size of

Employment Participation

Rate (%) Textile and Garments 900 1,530 2,430 11,260 21.58 Hotel and Tourism 480 56 536 1,332 40.24 Food and Beverages 1,240 30 1,270 11,500 11.04 Chemical and Metal Fabrication 1,670 620 2,290 6,870 33.33 Automobile Eng’g 840 20 860 1,900 45.26 Rubber and Plastic 4,611 2,509 7,120 10,650 66.85 Telecommunication/ICT/IT 846 30 876 1,944 45.06 Electrical and Electronics 490 330 820 3,100 26.45 Gem and Jewellery 280 40 320 2,200 14.54 Construction 680 90 770 1,740 44.20 Leather and Footwear 864 9 873 3,600 24.25 Total/Average 12,901 5,264 18,165 56,096 33.89

Source: Labour Market Survey, 2004.

81. Most of the surveyed establishments did not indicate the projected number of skilled workers and technician jobs for their individual requirements, as they have not done a formal assessment of needs.

iii. Participation Rate, Waiting Time and Remuneration of Employed TEVT Graduates in Industry

82. The participation of employed TEVT graduates with respect to the present stock of skilled and technical labour force ranges from 3.5% to 15.6%. By all indications, there is a low supply of TEVT graduates in skilled and technical categories. Those sectors where extremely low participation rate are seen are in Rubber and Plastics, Chemical and Metal Fabrication, Automobile and Leather and Footwear sectors. Table 10 shows the number and ratios of TEVT graduates with respect to the present stock of skilled and technical workers. 83. The waiting time for employment, in most cases, is within six months from passing out. However, in the construction industry 50% of the graduates have taken almost two years to get permanent employment. In the Gem and Jewellery sector 33% of the graduates have taken 10–12 months to find a job and in the automobile sector 22% of the graduates have taken 6–9 months to get a permanent job. The main reason for the difficulty in getting permanent employment is the lack of practical experience. The common forms of finding employment by the graduates are from referrals from the training institutions, relatives and friends and responses to newspaper advertisements.

Table 10: Number and Ratios of TEVT Graduates to the Present Stock of Skilled and Technical Labour Force

Industry Sector Number of TEVT Graduates

Skilled Workers and

Technicians Participation

Rate (%)

Textile and Garments 320 2,430 13.16 Hotel and Tourism 60 536 11.19 Food and Beverages 130 1,270 10.32 Chemical and Metal Fabrication 80 2,290 3.49 Automobile Engineering 60 860 6.97 Rubber and Plastic 220 7,120 3.08 Telecommunication/ICT/IT 84 876 9.59 Electrical and Electronics 80 820 9.76 Gem and Jewellery 82 320 22.5 Construction 120 770 15.58 Leather and Footwear 63 873 7.20

Source: Labour Market Survey, 2004. 84. Table 11 shows the average monthly remuneration of TEVT graduates by industry sector. The monthly average salary of employed TEVT graduates by industry sector ranges from SLRs5,937 to SLRs15,000 or a monthly average of SLRs8,069. 85. The leather and footwear sector paying the highest (SLRs15,000) monthly rate followed by the telecommunication/ICT/IT (SLRs13,500) and the construction (SLRs12,500) sectors. It appears that salaries in the Automobile (SLRs5,937) and Chemical and Metal Fabrication (SLRs7,166) sectors are much lower and below the average remuneration in all sectors.

Table 11: Remuneration Received by TEVT Graduates by Sector

Industry Sector Average per Month (SLRs) Hotel and Tourism 8,666 Automobile 5,937 Chemical and Metal Fabrication 7,166 Textile and Garments 11,500 Food and Beverages 7,500 Rubber and Plastic 7,750 Telecommunications/ICT/IT 13,500 Electrical & Electronics 11,750 Gems and Jewellery 8,750 Construction 12,500 Leather 15,000

Average Monthly Salary 8,069 Source: Labour Market Survey, 2003.

iv. Comparison of Salaries of Technicians, Technologists and Engineers in the Public Sector

86. The starting salary of technicians in the public sector ranges from SLRs40,800 to SLRs54,480 per annum which is almost two times lower when compared with the remuneration received by TEVT graduates in the Automobile and Chemical and Metal Fabrication sectors. It is to be noted that the two industry sectors represent the least paying sectors. On the other hand, the salaries received by technologist ranges from SLRs50,520 to SLRs74,160 which is about the same as those offered in the least paying sectors. 87. The starting salary of an engineer is SLRs97,500 per annum which is about twice the starting salary of technicians and technologists in the public sector. Yet, the salary is only equal to the average salary of employed TEVT graduates, which is SLRs8,069 per month across all sectors. Table 12 presents the salary scale of Sri Lanka Technological Service and the Sri Lanka Engineers Service.

Table 12: Salaries Received by Technicians, Technologists, and Engineers in the Public Sector

Salary Step

TechnicianCl. 1 Gr.1

Technician Cl. 1 Gr.2

Technician Cl. 2

Technician Cl. 3

Technologist Cl. 1

Technologist Cl. 2 Seg. A

Technologist Cl. 2 Seg. B

Engineer Cl. 3

1 54480 47,880 43,680 40,800 74,160 58,440 50,520 97,500 2 55800 49,200 44,640 41,760 75,720 59,760 51,840 100,200 3 57120 50,520 45,600 42,720 77,280 61,320 53,160 102,900 4 58440 51,840 46,560 43,680 78,840 62,880 54,480 105,600 5 59760 53,160 47,520 44,640 80,400 64,440 55,800 108,300 6 61080 54,480 48,480 45,600 81,960 66,000 57,120 111,000 7 62400 55,800 49,440 46,560 83,520 67,560 58,440 113,700 8 63720 57,120 50,400 47,520 85,080 69,120 59,760 116,400 9 65040 58,440 51,360 48,480 86,640 70,680 61,320 119,100 10 66360 59,760 52,320 49,440 88,200 72,240 62,880 121,800 11 67920 61,080 53,280 50,400 89,760 73,800 64,440 124,500 12 69480 62,400 54,600 51,360 91,320 75,360 66,000 127,200 13 71040 63,720 55,920 52,320 92,880 76,920 67,560 129,900 14 65,040 57,240 53,280 94,440 78,480 69,120 132,600 15 66,360 58,560 54,240 96,900 80,040 70,680 135,300 16 67,920 59,880 55,200 99,360 72,240 138,000 17 69,480 61,200 56,160 101,820 73,800 18 71,040 62,520 57,120 104,280 75,360 19 72,600 63,840 58,080 106,740 20 74,160 65,160 59,040 21 75,720 66,480 60,000 22 77,280 67,800 23 78,840 24 80,400 Source: Public Administration Circular 9/97 issued by the Ministry of Public Administration, 1997.

v. Mismatch between the Demand and Supply of Technicians and Skilled Workers

88. Demand and Supply of Technicians and other Paraprofessionals. The supply of the TEVT system when industries are taken as a whole is only about 50% of the employment generated. Therefore the demand figures in Table 13 represents 50% of the demand projected for the economy and do not include the demand of overseas employment. Furthermore, the gap between the supply from technological institutions at the current level is analyzed for the additional demand for technicians and paraprofessionals for the Years 2004, 2005, 2006, and 2007.

Table 13: Demand, Supply and Gap for Technicians and other Associate Professionals Year 2004

Year 2005

Year 2006

Year 2007 Industry

Sector De-mand

Supply Gap De-mand

Supply Gap De-mand

Sup-ply

Gap De-mand

Sup-ply

Gap

Agriculture, Forestry & Fisheries

1,037

363

674

1,041

363

678

1,044

363

681

1,047

363

684

Manufactur-ing

4,492

2611

1881

4,700

2611

2,089

4,908

2,611

2,297

5,116

2611

2,505

Construction 1,340 271

1069

1,403

271

1,132

1,465

271

1,194

1,528

271

1,257

Trade and Hotels

2,594

120

2474

2,736

120

2,616

2,877

120

2,757

3,019

120

2,899

Transport, Storage and Communi-cation

2,565

682

1,883

2,622

682

1,940

2,678

6,82

1,996

2,748

682

2,066

Insurance and Real Estate

5,888

370

5,518

6,261

370

5,891

6,814

370

6,444

7,007

370

6,637

Personal Sevices

1,531

684

847

1,567

684

883

1,603

684

919

1,639

684

955

Others: Electricity, Gas, Water, Quarrying

1701

20

1,681

1,663

20

1,643

1,626

20

1,606

1,589

20

1,569

Total 21,150 5,121 16,027 21,999 5,121 16,872 22,838 5,121 17,894 23,681 5,121 18,560Source: Labour Market Survey, 2004. 89. Considerable gaps exist for technicians and paraprofessionals in manufacturing, construction, trade and hotels, transport, storage and communication as well as for industry sectors of insurance and real estate and personal services. The supply could be partly improved if the internal efficiency of the present providers of technological training could be increased to a level that allows them to operate at full capacity. However, it remains that the wide gap between the supply and demand of technicians and paraprofessionals should be matched through expansion and diversification of the training system. Incentives such as the HREF would be able to stimulate private sector participation in demand-driven post secondary technological education and in-industry training programs for skills competitiveness of the workforce. 90. Demand and Supply of Skilled Workers. Two major occupational categories, namely: craft and related workers and plant and machine operators and assemblers constitute the skilled worker category. Table 14 presents the additional skilled workers to be supplied annually for the Years 2004, 2005, 2006, and 2007 by the TEVT system. However, it should be noted that only 50% of the demand is considered relevant for institutional training. 91. Table 14 shows that the yearly supply of skilled workers from TEVT providers including DTET, VTA and NAITA are very low compared to the demand the industry sectors, namely: manufacturing, construction, and transport, storage and communication sectors. The gap could not be significantly reduced even if the supply estimate is increased by 25% to accommodate the training output of other public, private and NGO training providers. There is a projected shortfall of over 61,000 skilled workers in the manufacturing sector in 2007 compared to the

demand of 72,000 skilled workers. It is estimated that it would take about 6 ½ years to train one year’s requirement of skilled workers for the sector.

Table 14: Demand, Supply, and Training Gap for Skilled Workers Industry Sector

Year 2004

Year 2005

Year 2006

Year 2007

De-mand

Sup-ply Gap De-

mand Sup-ply Gap De-

mand Sup-ply Gap De-

mand Sup-ply Gap

Agriculture, Forestry & Fisheries

865

291

574

867

291

576

870

291

579

873

291

582 Manufactur-ing

59,965

10,802

49,163

63,980

10,802

53,178

67,995

10,802

57,193

72,010

10,802

61,208

Construc-tion

20,302

3,060

17,242

21,252

3,060

18,192

22,202

3,060

19,142

23,151

3,060

20,091

Trade and Hotels

2,487

606

1,881

2,622

606

2,016

2,758

606

2,152

2,893

606

2,287

Transport, Storage and Communi-cation

17,401

1,743

15,658

17,783

1,743

16,040

18,166

1,743

16,423

18,548

1,743

16,805Insurance and Real Estate

2,020

-

2,020

2,148

-

2,148

2,276

-

2,276

2,404

-

2,404 Personal Sevices

1,497

10,081

+8,584

1,532

10,081

+8,549

1,568

10081

+8,513

1,603

10,081

+8,478

Others: Electricity, Gas, Water, Quarrying

3,874

3,362

512

3,789

3,362

427

3,705

3,362

343

3,619

3,362

257 Total 135,179 29,945 105,234 140,743 29,945 11,0798 146,307 29,945 11,6362 15,1871 29,945 12,1926

Source: Labour Market Survey, 2004. 92. There exists a phenomenon of skills gap in the major industry sectors while having the problem of unemployment among those with vocational training. This may be partly attributed to the gap between the aspirations of the youth and the realistic expectations of the employers and partly to the supply orientation of training. On the contrary, there is a large oversupply of skilled workers in the personal services sector which could be attributed to the proliferation of vocational training courses in shorthand and typing, accounting, computer applications, dressmaking, beauty culture and others.

vi. Demand for Foreign Employment 93. According to the Central Bank Annual Report 2002, foreign employment was significantly higher in 2002 compared to the previous year, and the registered number of departures during 2002 was around 204,000 compared to 184,000 in 2001. Females accounted for 65% of the migrant workers. 53% of the total migrant workers were in the category of housemaids, which was dominated by females, according to the Sri Lanka Foreign Employment Bureau Statistics. 94. Technician and Associate Professionals Category. Of the 31 selected technician and associate professional level job categories given in Table 15, the country has lost 11,905 and 12,467 jobs in 2000 and 2001, respectively. The percentage of missed job opportunities stands at 87% and 89%, respectively, for the two years.

Table 15: Gaps between Job Orders and Departures for Selected Jobs in the Technician and Associate Professional Category – 2001 and 2002

Year 2000 Year 2001 Gap Gap Job Job

Orders Departures No % Job

Orders Departures No % Designer–Home 19 0 19 100 80 4 76 95 Designer-Industrial products

88 8 80 91 72 6 66 92

Designer-landscape 0 0 0 0 18 1 17 95

Draughtsman- Auto cad 16 1 15 94 28 3 25 88

Draughtsman- General 45 6 39 87 116 1 115 99

Electrician–Auto 852 68 784 92 1,063 78 985 93 Electrician-building 345 31 314 91 526 33 493 94

Electrician-general 3,080 488 2,592 84 4,230 552 3,678 87

Foreman- general 656 40 616 94 966 68 898 93

Design maker 362 184 178 49 184 141 43 23 Pattern Maker 1,433 11 1,422 99 236 25 211 89 Nurse-general 898 14 854 95 722 15 707 98 Nurse-professional 685 16 669 98 377 6 371 99

Nurse-staff 836 13 823 98 970 35 935 96 Nurse-surgical 5 0 5 100 50 4 46 92 Technician- Ref & Air 980 102 878 90 1,674 156 1,518 91

Technician- Aluminum 27 2 25 93 110 0 110 100

Technician- Boiler 15 2 13 87 17 6 11 65

Technician – Computer 53 4 49 92 4 3 1 33

Technician- Electrical 126 46 80 63 161 27 134 83

Technician-telecom 286 48 238 83 272 41 231 85

Technician- Elevator 1,224 11 1,213 99 54 2 52 96

Technician- Equipment 29 9 20 69 10 9 1 10

Technician- General 1,306 524 782 60 1,697 291 1,406 83

Technician- Instrument 16 0 16 100 77 6 71 92

Technician- Lab 15 3 12 80 89 7 82 92

Technician- Laundry 11 2 9 82 34 2 32 94

Technician- Maintenance 111 43 68 61 100 22 78 78

Technician- Mechanical 109 17 92 84 97 23 74 76

All 13,628 1,693 11,905 87 14,034 1,567 12,467 89 Source: Sri Lanka Bureau of Foreign Employment Statistical Handbook of Migrations 2002

95. The large gaps seem conspicuous for the categories of electricians, nurses and technicians. Over 90% of the orders for the jobs in these categories have not satisfied in both 2000 and 2001. Nurse training is a government monopoly and the public sector nursing schools, capacity is not even adequate to meet the local demand, leaving aside the foreign demand. Incentives for the private sector and arrangements by the Government to provide practical training of the privately run nurse training programs in the public hospitals would prepare over 2,500 women for overseas jobs. The gap reported for technician job placements were 3,495 and 3,801 for the years 2000 and 2001, respectively. 96. Skilled Technical Worker Category. Of the 19 selected skilled technical category jobs given in Table 16, the country has missed 12,787 and 17,436 jobs in 2000 and 2001, respectively. This accounts for 89% and 90% of the job opportunities for the two years. There are technical training courses for preparing persons for almost all of these jobs. Therefore, the question is obviously on the validity of the content and methodology of these courses as well as the adequacy and quality of the inputs and throughputs (teaching-learning and management processes) used in the training delivery. Table 16: Gaps between the Job Orders and Departures for Selected Jobs in the Skilled

Worker Category – 2000 and 2001 Year 2000 Year 2001

Gap Gap Job Job Orders Departures No %

Job Orders Departures No %

Fabricator 128 58 70 55 2,237 106 2,131 95 Fitter- General 334 26 308 92 667 40 627 94

Fitter- pipe/ Plumber 3,092 271 2821 91 323 239 84 26

Steel Fixer 1,031 103 928 90 1,589 92 1,497 94 Latheman 88 7 81 92 172 1 171 99 Machinist 75 14 61 81 135 16 119 88 Mechanic- Ref & Air 541 39 502 92 955 49 906 95

Mechanic- Diesel equip 343 25 318 93 1,435 59 1,376 96

Mechanic general 3,112 312 2800 89 3571 446 3125 86

Mechanic – Heavy equip 346 26 320 92 336 19 317 94

Mechanic-Automobile Maker

284 33 251 88 440 38 402 91

Moulder- Fibreglass 59 38 21 36 75 11 64 85

Moulder-Plastics 4 0 4 100 85 22 63 74

Crane & Hoist Operator 179 14 165 92 382 33 349 91

Heavy Equip Operator 466 53 413 87 478 25 453 95

Auto Painter 254 14 240 94 319 12 307 96 Painter general 1,421 195 1,226 86 1,720 148 1,572 91 Welder-general 2,497 327 2,170 87 4,278 501 3,777 88 Welder-X ray 90 2 88 98 112 16 96 86

All 14,344 1,557 12,787 89 19,309 1,873 17,436 90 Source: Sri Lanka Bureau of Foreign Employment Statistical Handbook of Migration, 2002.

97. Bridging the Gap between the Demand and Supply of Foreign Jobs. The gaps clearly reflect the potential for the supply of about 4,000 foreign jobs at the technician level through the diversification and improvement of quality of existing Diploma level courses. Similarly, there exists a potential to provide decent skilled technical jobs for another 17,000-18,000 jobs annually. The potential to acquire foreign jobs belonging to the technicians & associate professionals category is about 12,000 to 13,000. The modernization of and quality enhancement in the TEVT sector can therefore bring in 29,000 to 31,000 additional foreign jobs annually. One of the most effective ways to access these foreign jobs is to introduce good quality skills upgrading courses for the existing employees so as to bridge the gap between their current competencies and the competency requirements of overseas placements. National employment policy clearly sets the goal of making the Sri Lankan labour globally competitive and puts forward strategies for expanding foreign employment. The skills training policies and strategies have a major role to play in realizing the national employment policy objectives to match the existing demand for technician and associate professional level jobs, to respond to the demand for skilled technical category jobs, and to expand the supply of high-level technical skills for firms in foreign countries.

vii. Essential Competencies of Technicians and Skilled Workers 98. Technical Skills Requirements. These are technical skills required to perform the job with respect to theoretical knowledge, practical knowledge, use of technology and the application of theory in the work environment. It was apparent that all sectors other than the Leather industry required a medium to high level of theoretical knowledge. The Rubber and Plastic, Telecommunication and the Electric and Electronic sector employers indicated that almost 1/3 of the graduates employed did not have the satisfactory level of theoretical knowledge of the technical subject content. 99. In almost all sectors other than Hotel & Tourism, Textile, Food & Beverage, Electrical & Electronics, Construction and Leather industry segments required a strong application of the theory, use of technology and practical application of the knowledge on the job by the respective employees. The survey indicated that the employees in all sectors were below the expected standards required for the job. This could also be attributed to the low level of knowledge on the recent automation and technology advancement in the specialized floor level application and the lack of training inputs from the class room teaching environment. 100. Key Competency Requirements. The second aspect surveyed was the key competencies required to perform the job. In this regard the key competencies identified were: Communication Skills, Team Work, Problem Solving, Creativity, use of information technology (IT), use of English and Managing resources. 101. Communication in the day-to-day work environment was identified to be an important and an integral aspect of work in all industries. Here too, from the perspective of the employer, it was commented that the workers lacked strong communication ability in the day-to-day operational, supervisory and management aspects of work. The shortcoming was in the ability to clearly express issues and problems. The aspect of communicating and importance of the English language is discussed separately below. 102. A high degree of expectation in problem solving was a prerequisite by the employers of the graduate intake of skilled and technical workers in all industry segments. However the survey indicated that the employees were not adequately equipped to handle and resolve the problems in the working environment. This does not mean that the employees did not have the

ability to resolve problems by themselves but, they required greater supervision and explanation. From the organizations’ point of view there is a delay in quickly satisfying customer needs. In the sector of Hotel & Tourism, Automobile, Chemical, Information and Communication Technology (ICT), Electrical and Electronics and the construction industry it was noted that the employers expectations were high whereas the employees were performing at moderate levels from the perspective of the employer. 103. The level of teamwork required by each of the industry segments varied from moderate to high level of teamwork. In the sectors of Hotel, Textile, Telecommunication, Food and Beverage the expected teamwork requirement is high while the workers performance in this aspect was working very well in the Textile, Hotel, Rubber and Electronics industries and to moderate levels in all the other sectors. 104. The use of IT and Automation in the work environment is becoming a requirement now in the Hotel & Tourism sector, Automobile industry, Chemical, ICT and Electronics industry. In these sectors the actual application by the employees was found to be satisfactory but must be improved to higher acceptance level. 105. The use of the English language in the day-to-day work environment is strongly required in the Hotel & Tourism Industry and work related use of the English Language is not essential but preferred in other industry segments. 106. Personal Qualities Required for the Job. The final component in determining the competency requirements of the TVET graduate was the determination of the personal qualities in respect of: responsibility, sociability, integrity, self-motivation, punctuality, work ethics and attitude to work and commitment to work. 107. The need for acceptance of responsibility for the work done by the individual is given prime importance by the employers in all industry segments, however it is noted from the outcome of the survey that the degree of responsibility is below expectations of the employers. The survey did not touch upon the aspect of the responsibility commensurate with authority and decision making ability given to the various levels of employees. Hence one cannot form conclusions in this aspect other that reporting the perceived expectation gaps in acceptance of responsibility by employees. 108. Here too the perceived level of integrity was addressed and it was found that the perceived levels of integrity were adequately maintained in all sectors. 109. Employers were asked if the level of self-motivation is a requisite for the job. In this regard the levels of self-motivation required by the various sectors ranged from moderate to high and was satisfactorily been achieved overall. 110. In this aspect punctuality was identified as a key requirement for the job, but in practice varied from moderate to high levels of punctuality. 111. It was noted that the attitude to work was far from expected in almost all sectors. It is an area, which requires overall improvement. 112. Employees do demonstrate their commitment to work but, commitment in a holistic sense was lacking due to attitude and other behavioural aspects.

b. Draft National Skills Development Policy 113. The draft national policy for skills development was a major output of the technical assistance (TA) to provide the roadmap for TEVT in the country.13 The draft policy served as one of the focal points in developing the Investment Project for future assistance by ADB in improving the relevance and efficiency of TEVT system as a strategy for economic growth and poverty reduction. The digest of the draft policy is as follows:

i. Background and Introduction 114. The Government values capable and flexible human resources as the critical factor for socio-economic development in the face of the challenges of the 21st century. The twin objectives of skills development are (i) to encourage all citizens, especially the youth to develop to the best of their potential and (ii) to produce a competent and flexible labour force that will carry forward the social and economic development process while responding to the changing economic environment. While the former objective calls for human development the latter requires skills development to serve the needs of the economy.

ii. Policy Objectives 115. The draft policy spelt out policy objectives, which will guide the TEVT system in its strategic planning for relevance, efficiency and effectiveness in meeting the economic, and social development agenda of the Government. These are as follows:

(i) to maintain a skill development system that would develop the full potential of the people while imparting nationally and globally relevant skills through a partnership between the public and private sectors;

(ii) to be demand-driven in meeting the changing needs of corporate industry sector, small and medium-sized enterprises (SMEs) and self-employment in the informal economy to improve institutional efficiency, product quality, productivity and competitiveness;

(iii) to maintain a strong interface with employers in needs identification, selection of contents, designing course structure, designing contents, delivery and evaluation of outcomes of training;

(iv) to rationalize the existing institutional infrastructure, resources and programs to ensure optimum utilization of available resources rather than creating new institutions;

(v) to streamline the management and administration of the system through devolution and decentralization;

(vi) to maintain a desirable balance among pre-employment training and skills upgrading and retraining of existing workers to promote job acquisition of new entrants and to promote occupational mobility and foreign employment that accompany better remuneration;

(vii) to reduce the dependence on Government funds for training by encouraging self-financing and cost sharing by beneficiaries;

(viii) to set up national frameworks for standards, qualifications, quality assurance, funding and coordination to ensure rationalization and coherence in the provision of skills training;

13 Study on National Skills Policy was undertaken by InfoTech IDEAS for ADB TA 4090, 2004.

(ix) to encourage active participation of the private sector in skills training through creating a level playing field and providing incentives for direct investment and public-private partnerships;

(x) to promote career guidance to assist persons in selecting jobs and developing careers that best match their needs with available opportunities;

(xi) to build the social image of technicians, craftsmen and skilled workers and promote the esteem for skills training;

(xii) to continue to develop the professional status and quality of trainers through strong initial preparation and in-service training to adapt to changing technological, social and organizational environment;

(xiii) to improve the quality & relevance, efficiency and effectiveness of public sector training through criteria-based funding and granting autonomy to training institutions; and

(xiv) to improve the access for quality skills training for women, rural and plantation communities, persons with disabilities, persons affected by ethnic conflict and other disadvantaged categories.

c. Restructuring Plans for TEVT

116. MTET is spearheading an ongoing rationalization of the TEVT sector. A study on restructuring of the TEVT system was conducted during the TA.14 Major restructuring of TEVT will take the form of policy changes, administrative streamlining, strengthening of institutional capacities and capabilities and a reorientation of programs and services to labour market demand. It is intended that there will be a major merger of some public TEVT providers to make the system more unified, demand driven and cost-effective. 117. As a result of the TA study, following are the recommendations as presented by GHRD.

iii. Proposed Structure of the TEVT Sector

(i) Establish a clear structure for the TEVT Sector based on action imperatives arising from the SWOT analysis, discussions during the TA and policy frameworks proposed by the NEC and others.

Figure III: Structure of the Education Sector

UGC TVEC Dept. of Education

National Education

Commission

Representation & Inputs

Ministry In Charge of Education

14 Study on TEVT Structuring Plan was undertaken by GHRD for ADB TA 4090, 2004.

(ii) NEC shall act as the coordinating and moderating body for the overall policy on education under a single ministry scenario. University Grants Commission (UGC), TVEC and the Department of Education shall provider policy planning and implementation leadership to the respective sub-sector.

(iii) Strengthen TVEC to become the unequivocal apex body of the TEVT Sector responsible for providing a vision, planning strategies and programs to achieve that vision and regulating the TEVT Sector in Sri Lanka towards a quality assured unified system.

(iv) Establish an Inter-Ministerial TEVT Committee (IMTC) to facilitate a steady flow of information and expertise across the various ministry providers of TEVT. Engage a liaison officer at each ministry to coordinate the TVET agenda with the TVEC.

Figure IV: Structure of Coordination of the TEVT Sector

Ministry In Charge of Education

TVEC TEVT Liaison Officer

Inter-Ministerial

TEVT Committee

Other Ministries Offering TEVT

(v) Establish a committee comprising representatives of the TVEC and the Foreign Employment Bureau to draft and implement the overall strategy to cater to the managerial, technical and skills oriented job opportunities in the foreign job market. Offer specially developed courses funded through a credit line administered by participating banks that provides income contingent loans to trainees.

(vi) Establish a National TEVT Forum that shall meet bi-annually to share information, discuss issues and programs and enable networking among the stakeholders in the sector.

(vii) Establish an independent committee reporting to the TVEC Chairperson to investigate the complaints from trainees and employers.

iv. Macro Level Adjustments

(i) Lobby the government for a single ministry for education (primary and secondary,

tertiary, and TEVT) with three state or deputy ministers in charge of each of the sub-sectors.

(ii) Obtain the government’s commitment to fund the TEVT sector within a long term policy framework as a percentage of the GDP.

(iii) Continue contributions from the employers to the National Endowment Fund. Investigate the possibility of linking the contributions to the payroll as in the case of EPF, whereby contributions would be made to flow from both the employer and employee on a monthly basis. In this manner the country will be investing in upgrading its skills base via funding from all employers, including loss making firms which would also be compelled to contribute to the fund.

(iv) A loan from the EPF balance shall be made available for members of EPF for their own education, or their children, in tertiary education and/or vocational training at an institution approved by the TVEC.

(v) Provide funding through a single basket based on the priorities identified in a strategic plan developed for the TEVT Sector through the TVEC.

(vi) Introduce procedures and guidelines to develop a vibrant and market responsive TEVT industry comprised of local enterprises capable of achieving international standards and competing in the international market.

(vii) Establish a series of ‘Skills Learning Centres’ to attract dropouts from the school system before sitting for GCE O-L and provide them with a ‘General Education Plus’ package comprised of literacy and numeracy skills and vocational skills. In collaboration with the NEC and the Department of Education, investigate using networks such as Agrarian Services Committees to create a network of agriculture-oriented Skills Learning Centres. Likewise investigate the potential to establish Skills Learning Centres for the construction industry, gems and jewellery industry and localised arts and crafts.

(viii) Establish a local TEVT network under the supervision of each LRUC and Career Guidance Centre linking them with the Skills Learning Centres, regional chamber of commerce, and trade associations etc. in the catchment area of the LRUC.

(ix) Establish a Public – Private Partnership Facilitation Centre under the supervision of NEC and supported by the UGC, TVEC and the Department of Education to promote the concept of Public-Private Partnerships (PPPs), to train the public sector managers on PPP process, to provide details of successful models, and to provide access to expert inputs where necessary.

(x) Facilitate the establishment of the National Association of Training Provider (NATP) as the apex professional body for the TVET providers in the country with a mandate and dynamics similar to that of a chamber of commerce.

(xi) Upgrade selected technical collages to become ‘Colleges of Technology (COT)’ equipped with faculty and infrastructure to deliver courses in NVQ levels 5 and 6 (higher diplomas and associate degrees) for which there are no facilities at present.

(xii) Set up a Technology University to provide NVQ Level 7 degree and associate degree courses. This university will have a strong skills bias as against the theory bias at the conventional universities.

(xiii) Introduce mechanisms under the proposed Human Resources Endowment Fund (HREF) to provide financial assistance to the students to procure their training from accredited suppliers. Such financial assistance shall be a part loan and a part grant where the loan component shall remain interest free until the graduate becomes employed and earns an income above a minimum threshold. Debts under the HREF shall be indexed to the CPI. Interest of the loan shall be fixed for each year at one percentage point above the Average Weighted Deposit Rate (AWDR) of the commercial banks.

(xiv) Establish a ‘TEVT Service’ (similar to Sri Lanka Administrative Service) with a suitable carder and career paths and accredit and upgrade all existing trainers through this TEVT Service.

(xv) All Chief Executive Officer (CEO) positions of the TEVT institutions shall be for a period of four years, which shall be renewed on the basis of mid-term and final performance reviews. No CEO shall be removed other than as per the contract, which shall be drafted using the best practices in the TEVT sector.

v. Institutional Reforms in Public Sector

(i) Enhance the capacity of the TVEC to be the undisputed apex executive body in TEVT Sector and capable of performing the planning, coordination, accreditation, resources management and other functions as detailed in the TVEC Act as amended.

(ii) Combine the programs, activities and resources of the NAITA and VTA preferably through the formation of a single autonomous authority that shall concentrate on NVQ Levels 2, 3 and 4. It is expected that NVQ Level 1 courses shall be conducted by the ‘Skills Learning Centres’ that are broadly community based.

(iii) Combine the programs, activities and resources of the DTET and SLIATE preferably through the formation of a single autonomous authority to concentrate on the delivery of courses in NVQ Levels 4 and 5.

(iv) Combine the programs, activities and resources of the NITESL and NITE preferably through the formation of a single autonomous authority. Enhance the capacity of the relevant combined authority to specialise in curriculum development (similar to National Institute of Education – NIE), conduct aptitude tests for trainers, recruit and train the trainers for all public sector TEVT providers under the TVEC, design trade tests and any other similar specialist function that the entity is capable of providing.

(v) Remove administrative and procedural restrictions and empower the management of public sector TEVT providers to design and deliver short courses, conduct combined revenue generation and training models (such as automobile repair shops, communication centres, cyber cafes etc.) and encourage surplus generation through a profit sharing scheme.

(vi) Establish a Research and Development Division under the TVEC to assist the stakeholders and the industry in general.

(vii) Establish a Board of Management at each institution to provide general management inputs relieving the Board of Directors/Governors of such work and allowing them to concentrate on performance monitoring and strategic planning. Board of Management shall comprise of the CEO, representatives of the Board of Directors/Governors, senior staff (ex-officio) and representatives of the unions.

vi. Reforms in Private Sector

(i) Enforce accreditation of institutions, courses and trainers to make the private

sector TEVT providers quality assured. (ii) After a suitable grace period (say 12 months), take measures to limit TEVT

delivery only by accredited TEVT providers. (iii) Promote self-regulation through the National Association of Training Providers

(NATP). (iv) Promote PPPs and resources sharing and exchange between the public and

private sector providers. (v) Assist enterprises to operate training centres for their own staff and others by

providing suitable funding assistance and curriculum development support. (vi) Employees Provident Fund (EPF) and Employees Trust Fund (ETF) shall

establish a credit line administered by a development bank to fund the training providers.

(vii) Accredited Business Development Service (BDS) providers to be encouraged to provide modules and courses conducted at the public sector and private sector TEVT providers to improve soft skills of the trainees.

vii. New Products & Services

(i) Introduce evening and weekend refresher courses for prior graduates of the TEVT system to meet their continuous professional development needs.

(ii) Introduce evening and weekend courses to develop skills related to hobbies such as photography, fabric painting, Do It Yourself (DIY) skills in carpentry etc.

(iii) Establish a Technology Extension Division under NAITA (or the relevant combined authority) to encourage the MSME owners to undertake formal training and assist them to access Business Development Services (BDS) from the Industrial Development Board (IDB), Industrial Technology Institute (ITI) and private BDS providers.

(iv) Provide extension to the enterprises to undertake training needs analysis working closely with BDS Providers.

(v) Public sector institutions shall license national certificates and diplomas to be conducted by accredited TEVT providers under the supervision and testing by the respective public institution.

viii. Social Marketing & Integration

(i) Work with the religious leaders to introduce modules on equality of human

beings, work ethics, continuous personal development and the responsibilities in the workplace for students in Grades 9, 10, 11, 12 and 13 at Buddhist, Hindu, Islamic and Christian ‘Daham Pasalas’ (Sunday Religious Schools) to develop an understanding of the importance of these issues and the theological and spiritual perspective of the respective religion among the students.

(ii) Provide work exposure to every student, say about one week duration each at the Grades 9, 10, 11, 12 and 13, as part of the school-based assessment in order to have students more aware of workplace issues and responsibilities.

(iii) Through activities such as career guidance, career markets and exhibitions which are oriented to TEVT subjects at the secondary and post secondary levels,

(iv) Introduce scholarships for the best graduates of selected courses to undertake further studies at the next higher level.

(v) Hold convocations to confer certificates and diplomas to TEVT graduates. These may be held as bi-annual, inter-institutional and regionally organized events with industry sponsorship and suitable career craftspersons, technologists or technicians as guests of honour who, as the chief guests, can act and role models.

(vi) Establish facilities for extra-curricular activities at the institutions and to create a social and extra-curricular activities calendar to promote inter-agency sports and talent competitions that will make residency at the training institutions attractive and help the trainees to develop wider relationships.

ix. New Partners in TEVT Provision

(i) Assist selected Trade Unions to establish joint training facilities with the corporate

sector in order to enhance the skills of the membership and their children. (ii) Assist countries that are major employers of Sri Lankans to set up special training

facilities in Sri Lanka and to offer courses to provide orientation, cultural sensitivity and specific skills relevant to the respective country. (Note: South Korea has indicated willingness to set up a facility of this nature. The overseas employers will be able to reduce the cost of training when conducted in Sri Lanka

and both the trainees and the employers will have a second screening opportunity on completion of the training. Workers will be able to command a higher wage as they have already been trained to the skills standards of the respective country).

x. Information Systems

(i) Adhere to ILO occupation classifications in the conduct of surveys and compiling

statistics at the Department of Census and Statistics, Foreign Employment Bureau, TVEC, TEVT Providers etc.

(ii) Introduce a Foreign Employment Access Service to provide counselling and through the TEVT system in collaboration of the Foreign Employment Bureau. This initiative will improve the interaction between TEVT providers and potential trainees and align them with the job market.

(iii) Establish an inter-provider database at the TVEC and provide a lifetime registration number to each student to facilitate prior learning recognition, continuous professional development, transfer of credits etc.

(iv) Establish a service provider registry in the manufacturing and service sectors with suitable grading to create an accredited SME sector. This registry shall be used to promote the procurement of goods and services from these enterprises by the government bodies and local government authorities. Dynamics shall be similar to that of the Institute of Consortium Training and Development (ICTAD) and the register could be funded through annual subscriptions. Registration renewal shall be used as a survey form to obtain the latest details about the enterprise, the sector, local area and the economy.

(v) Publish an annual training directory that includes all TVEC registered TEVT providers with details such as facilities, courses, staff strength and TVEC accreditation status etc to guide the potential trainees.

xi. Industry Reforms

(i) Facilitate the formation of sector councils and trade associations and assist

selected councils and associations to develop specific courses applicable to their speciality.

(ii) Introduce concepts such as ‘Master Tradesperson’ (master builder etc. as available in the Australian and German industry) where each tradesperson would have a skills grade indicative of his or her competencies.

(iii) Lobby for soft loans for the industry to upgrade their production facilities so that productivity gains could be achieved and shared with workers and the quality of on the job training would be enhanced.

(iv) Establish ‘Workplace Learning Centres (WPCs)’ in contrast with Workplace Training Centres, where the workers take the initiative for self-learning through employer sponsored courses that are delivered via internet or through other modes including distance learning.

9. Stakeholders’ Consultation on the Proposed Project

118. A two-day workshop held on 28 and 29 November 2003 which was attended by key stakeholders including representatives from the private industry sector, the on-going Skills Development Project (SDP), the MTET, the Federation of Chambers of Commerce and Industry and the non government organizations sought to validate the project concept and design. The

general comments and suggestions which were mostly supportive of the proposed project are summarized as follows:

(i) unanimous agreement on the need for the development of technician level training;

(ii) the focus may be on developing the GCE O-L graduates as they would be more suitable for technician training and would tend to stay on as technicians. The need to accommodate informally trained persons was also noted;

(iii) mechanisms and procedures proposed in the project may be reviewed for proper integration with the other systems such as the NVQ Framework, the quality assurance and accreditation systems which are part of the on-going SDP;

(iv) one such requirement is “Train the Trainer” which has a catalytic effect on the entire training sector. This is because the current training and teaching skills of most of the technical trainers are found to be well below acceptable standards;

(v) there are structural imbalances in industry caused by the low engineer-technician ratio, quoted to be almost 1:1 as against 1:4 in the more developed countries;

(vi) there should be mechanisms to measure the effectiveness and outcomes of the grants/soft loans and to ensure a desirable level of accountability;

(vii) the geographical and sector quotas for the proposed National Technology Awards (NTA) scheme should be considered carefully to avoid the high cost of administration as well as to ensure equity and equal opportunities;

(viii) skills areas as defined by the Government; industry growth; active industry interest and overseas employment should be considered in determining the sector quotas, if any; and

(ix) family income as a criterion for the NTA should be closely examined in view of possible manipulation, abuse and the fact that most of the trainees would be adults of over 18 years of age.

119. A national workshop was held on 11 February for the presentation of the draft investment project to key stakeholders and project participants including MTET, major public and private TEVT providers, industry, donors, NGOs and trade and professional associations. Some of the observations and concerns were earlier presented and addressed in consultation with higher authorities. These are as follows:

(i) emphasis on diverting students after GCE O-L for TEVT; (ii) inclusion of teacher training as a separate full component for the project; (iii) need for the continued prominent involvement in TEVT; (iv) strengthening TVEC as the apex body in TEVT; (v) integration of the ITUM, GTZ, etc. into the Human Resource Investment Fund

(HRIF) component; (vi) focus on Levels 3–6 of the NVQ; and (vii) avoidance of previous mistakes of inappropriate curriculum, creation of white

elephants, etc.

10. Steering Committee (SC) 120. The SC which is chaired by the Secretary of MTET convened three times to provide directions to the HRIP TA consultants in the design of the Investment project. Six major decisions were made by the SC as follows:

(i) There should not be any duplication between the ongoing SDP (ADB Loan No. 1707-SRI) and the proposed Investment project. However, the Investment project should look into those components in the ongoing project that may need further strengthening.

(ii) The Investment project, which is aimed to develop higher-level technical skills, should cater mainly to GCE A-L qualified youth who cannot be accommodated in universities to provide them alternative career path. GCE O-L graduates with NCTs or equivalent craft-level certificates may be eligible for admission provided some equivalency requirements to be set by TVEC are fulfilled.

(iii) The project will support the strengthening of TVEC in performing its functions as mandated by law, i.e., planning, registration, accreditation and quality assurance.

(iv) The project will ensure the development of management capabilities of selected COTs for their sustainability after project completion.

(v) Project consultants should be limited to the most essential needs and must be process-oriented rather than performing advisory functions.

(vi) There will be a need to undertake pre-project actions, i.e., selection of COTs through competitive basis, building capability of selected COTs in proposal development and developing loan disbursement, accounting and financial reporting systems.

E. Problems and Drawbacks of the TEVT Sector

1. Poorly Motivated Student Intake 121. Students who qualify for study in the current technician training system have little desire to become technicians. With a requirement of GCE A-L completion, most applicants are fully qualified for university and are deeply disappointed that they were not fortunate enough not to be among the 13,000 successful university entrants. Technician training in whatever format does not lead to a degree. The students continually agitate to be awarded degrees and given the current attitude of the university system and its control of degrees, this is unlikely to happen. Discussions with students focus on degrees, not on technology or work. The dropout rate is very high with an output from the entire technician system of less than 650 per year from a yearly intake of only about 3,000. 122. With no financial investments from the students in their own training and a strong feeling of entitlement, there is no commitment to the training process. GCE O-L students are not eligible for Higher National Diploma (HND) studies other than through a tortuous process about which they know little, as there is virtually no public information process in TEVT. In addition, the TEVT system is designed to absorb university-bound students who were unsuccessful in gaining university admission rather than training young or mid-career men and women who want to become technicians and considering this as an achievement. Rather, the current TEVT system in Sri Lanka is one based on failure, not on success. 123. Another reason for the poor reception of the youth to be educated and trained as technicians and technologists can be attributed to the lopsided salary structures, particularly, in the public sector. There is a wide salary gap between the salary of the highest grade of technician and the lowest grade of engineer. Throughout their career the technician’s salary is about half of the engineer’s salary at the corresponding steps. On the other hand, technologists to whose ranks the NDT and HNDE qualified persons are recruited have salary scales that are slightly better than those of technicians but are way below the salary of engineers at point of recruitment.

2. A Supply-Driven Model

124. Government determines what shall be taught, to whom it shall be taught, who will teach it and where it will be taught. Thus the TEVT system has no relationship with technician skills as required by employers or of the current trends in industry. Teachers have virtually no industrial experience and their pay level is so inadequate that it is not an attractive career option for qualified people. Employers are not involved in setting program standards, in validating curricula or in any of the decision processes in TEVT. Interviews with employers and the sector associations that represent them reveal a deep dissatisfaction with TEVT at most levels. There is a general feeling that the present system plays no role in the country’s development. Generally, it is felt that the system only serves to “warehouse” young people who cannot go to the university but have no interest in technician level employment. As the economy begins to expand and foreign investments increase, the demands for technicians increase, industry will have strong need for qualified technicians well in excess of the capacity of the present system which produced only 126 graduates (SLIATE) in 2002. 125. With the increased competition from other low-wage countries in the garment and plastic industries, export growth can only be sustained by improving labour force skills. International employers are undertaking basic skills upgrading and with some limited upgrading in basic software skills. However, most employers are not yet committed to workforce upgrading for productivity enhancement and the current Skills Development Fund is not effective in this regard. 126. Overseas Sri Lankan workers contributed $1.2 billion to the economy in remittances in 2002. However, they tend to cluster in the bottom-rung jobs as housekeepers and labourers. Placements fall well below the demand in the skilled workers and technicians categories. Middle East employers express a growing demand for higher-level skills as technology changes.

3. Weak Public-Private Sector Partnerships 127. Effective technician education requires the leadership by the employers and the responsiveness of TEVT providers to this leadership. A number of projects have sought to improve the linkages between Government training institutions and employers but with mixed success. At this time, the links are still tenuous. Public institutions offer courses of study that do not lead to employment. Program standards are obscure at best and industry has not validated these standards as being relevant. TEVT institutions operate as if they are part of the university preparation system, dominated by theory with very little application. This same condition exists or has existed in most technician training systems that started in the 1950’s. When institutions are not responsive to change, they become irrelevant and adding new equipment or facilities without any basic system redirection is only wasteful.

4. Paucity of Choice or Options 128. Private sector trainers abound in the IT sector but are quite few in the other areas. As families do not value technology as a career direction for their GCE A-L graduate children, no real market has developed other than in IT where clever marketing has placed low-level skills at the post graduate diploma entry levels and hence created social acceptability. Even in the private sector IT field, there is a wide range of providers from highly ethical and effective institutions to the usual unscrupulous operators.

129. The absence of a broad range of TEVT private sector trainers has allowed public sector dominance in the area and led to the absence of any effective alternative models. Institution-based technician training is an expensive and time-consuming alternative. Nevertheless when this is part of the maturation process for the young there are arguments for its usefulness. However, for those already employed or for those passed school leaving age or are jobless university graduates, other models are more preferred and are far more cost effective. The absence of this alternative on a broad base limits the ability of employers and Government to support new directions and to offer more cost effective and sustainable choices.

5. Few Incentives for Change 130. Visits to TEVT institutions reveal that there are no incentives for the public sector institutions to change. They cannot generate revenues needed to improve their own situation despite the fact that Government funding is inadequate to meet even basic institutional maintenance. Salaries are at such low levels that qualified people have little interest in the system. The institutions cannot charge fees to full time students. Individual faculty needs second and sometimes even third jobs to meet the needs of their families. There is no relation between institutional performance and financing or between individual performance and salaries. There are no incentives. Directions are set, reforms discussed, investments made but virtually nothing changes, as there is no benefit to be gained from it. It has to be recognized that incentives work better than conditionality.

6. Block Based Funding of Institutions 131. TEVT relies on the Government as its main provider and financier. There are current policy initiatives attempting to redefine the role of the Government to that of a standards setter, facilitator and regulator to be attuned with the changing times but fails to introduce any radical changes due to system inertia and political will. Sri Lanka is the only Asian country today that continues to make public education and training free up to the university, first-degree level. As a consequence the system is generally under-funded and as far as TEVT is concerned, it is under-funded to the degree that the system is ineffective by almost every measure. The recurrent budget pays for salaries and public utility bills but generally lack provisions for the acquisition of training materials and other operating expenses. There are no incentives to retain students or to respond to industry. The present practice of fund allocation is by incremental budgeting, which is mainly based on past annual recurrent expenditures and a fixed student intake. The financing system is essentially a lobbying process based on politics rather than on established criteria or performance norms. The need to have these criteria is recognized as being important but not much serious work has been done to initiate the process.

7. Dearth of Technician Standards 132. There are no effective institutional standards for TEVT institutions, private or public, and there are no operational program standards consistently that can be used as a curriculum base in the TEVT institutions. TVEC has a mandate to put quality assurance standards in place but does not have the capacity or expertise to carry this out. Developing local program standards and then developing the curricula from those standards will be a very long drawn out process, if indeed it is possible to carry out at all. Employers cannot wait several years before the well-trained technicians are available to them. In fact, in most technologies there are no local standards. The computer to be repaired in Colombo is the same as that in Singapore or Toronto. There should only be one international program standard for the skills that workers should have. At present, industry has no involvement in setting or validating curriculum

standards and thus has little interest in the graduates from Government TEVT institutions. A NVQ System may be developed over time. While it can be assumed that an NVQ System, competency-based education scheme is being developed by MTET, but both its development and acceptance are still many years in the future and the discipline required by personnel in such institutions to use such a system is unlikely at this point of development. At present, there are no effective technician standards and the curricula being used are outdated, theoretical and have little practical value.

8. Ineffective Management Information System 133. There is no proper management information system (MIS) that operates between MTET and its major line agencies for proper monitoring and evaluation of useful information for policy formulation, planning and decision-making. The TEVT database is not properly organized or easily accessible even at the institutional level. There is poor handling of information, which makes the major TEVT providers isolated. An on-line job referral system similar to that of JobsNet being operated jointly by the Ceylon Chamber of Commerce and the Ministry of Employment and Labour does not exist where educational database such as personnel, courses, enrolment, funding and job placement of TEVT-graduates can be accessed. In fact, most of the major public providers, namely: MTET, VTA and NAITA have collaborated with JobsNet. Because there is no reliable or transparent data system, much of MTET’s daily effort is committed to basic data acquisition. Given that MTET micromanages the institutions - leaving institutional leaders almost no freedom to act - the decision making process is disjointed and superficial. The trade off for some institutional autonomy must be the assurance that reliable information from each institution will flow to MTET. The absence of such a system will make the Government reluctant to give more institutional freedom or to accept the existence of autonomous Boards of Management.

9. Poor TEVT Quality Assurance 134. TVEC has the mandate to provide quality assurance in the TEVT system. Presently there is an institutional registration system that is quite rudimentary and largely ignored. The SDP is developing the basic inputs of a quality system but this will take some time before it matures. There is no mechanism in place to establish program standards and consequently insure that these standards are respected. There is little or no involvement of industry in standards setting although the SDP has already begun this process. However, TVEC has neither the staff nor the skills to audit compliance to TEVT standards. Without any form of quality assurance, institutions teach what they choose in any manner they choose to do. Public institutions teach to curriculum devised by academics and reduced to the immediate educational background of whomever staff is available to teach. Industry has no respect for TEVT, as it is clear there are no standards set by industry and the graduates may or may not have any of the desired skills. If an endowment fund process were put in place, there is no mechanism to assure that the training supported by the fund would have any impact on productivity or compliance in any way with international standards. Without such a system, the fund might have very little impact. There are exceptions to these quality generalizations, but at the systems level, the situation is bleak.

10. Weak Overseeing of the Quality Assurance System 135. TVEC was established to address many of the basic problems in TEVT. A key problem area is the establishment and enforcement of institutional and program standards. Although it might be possible for TVEC to outsource the maintenance of an established standards

compliance system, TVEC itself must be assured that the standards established are validated by industry and the institutions offering programs to these standards are audited for compliance in a consistent and transparent manner. At this time, TVEC is beginning the process of standards development but has no capability to enforce compliance with those standards or to ensure that any subcontracted agency involved in compliance auditing was providing a consistent and transparent service.

11. Poor Promotion of TEVT

136. TEVT has a poor social image. Parents and students have a social bias against TEVT as a career. This is the aftermath of the caste system and the colonial era in which the rulers devised a system that produced clerks as valued assistants and left the trades to the lower levels of people. Hence, the social demand for TEVT courses is not necessarily a case of economic demand for employable skills but has become as an alternative for personal aspirations which otherwise are not possible due to sheer poverty, low scholastic performance or non-admission to higher education. There is no effort put into convincing families that economic opportunity awaits technicians. Attitudes towards female participation at the technician level seem very negative and the level of female participation in this field substantiates this point of view. Public images in advertisements represent workers as illiterate, ill-mannered buffoons. There is a need to neutralize this mind set in the light of the emerging global realities through social marketing of TEVT programs, including provision of student services to assist the youth in their vocational orientation, career mapping, job placement and continuing education for their life-long employability. There is more reason to start the process of change by packaging and selling TEVT courses like any consumer products to hasten the psycho-cultural change process.

12. Too Centralized Governance of TEVT 137. TEVT institutions report directly to Government or in a few special cases, the Boards dominated by civil servants and university academics. As a consequence, there is no direction at the institutional level other than to become academic institutions responding to the micro-management of the given Government department. TEVT managers are not comfortable in seeking meetings with industry, are given no direction to do so, and have no authority to work directly with industry if the opportunity were to arise. Equally, as Government-directed institutions, they have no clear mandate to earn revenues in the training market place and no protection from political processes. Even the most minor of issues with students are often resolved not in the institution, but in the Government central offices in Colombo. Thus, as TEVT institutions gradually deteriorate both physically and functionally, there is no framework for them to take charge of their own destiny and to re-engineer a workable future. As they follow a national curriculum, they have no ability to respond to local needs. Having no ability to keep any of the income earned, they close at 3 pm each day and do nothing for the local community, such as extension or outreach programs.

13. Poor Strategic Planning 138. It has become common to see statements of visions and goals by the major TEVT providers in their strategic plans, which are neither well focused on their mandates nor related to national plans and aspirations. At the institutional level, planning is not a major concern of institutional managers due to the lack of autonomy and accountability. A strategic plan is a blueprint to be carried out by empowered people in the organization. Strategic planning is a distinctive skill that principals and directors should have as change managers. Planning skills

are needed to be able to analyze the internal and external environment of organizations for formulating strategic options to become dynamic, effective and self-reliant. There is a need to develop a planning culture as a pre-condition for institutional autonomy.

14. Inadequate Budgets and Incremental Budgeting 139. TEVT institutions receive the same level of funding regardless of performance. The financial system does not encourage retaining earned revenues to augment inadequate Government funding, as revenues must be returned to the Treasury. There is no reward for institutional efficiency and no bonus for effectiveness. As noted, a high dropout rate has no impact on institutional funding. Teachers are poorly paid and often need second or even third jobs to survive. The fabric of many institutions is in serious decay and some have buildings that should best be abandoned. As there is no incentive to change, institutions stagnate and both faculty and students are dispirited.

140. Financial management at the institutional level is more of a routine. The financial end of operation is highly centralized. The directors have limited authority in financial matters including payment of weekly payrolls and requisitions of consumables. By and large, there is no financial autonomy at the institutional level.

15. Lack of Managerial and Entrepreneurial Skills

141. TEVT institutions appear to be managed like a free public school system, which lack a business orientation or an entrepreneurial interest. There are very few TEVT institutions with production centres for revenue generation that can broaden an institution’s financial base in addition to providing more practical training jobs for teachers and students. In general, there are no major public TEVT providers that are engaged in consultancy services like the Clothing Industry Training Institute and Textile Training and Services Centre, which are ISO accredited for technical and testing services, thereby generating millions of rupees of income every month for their own operation and financial sustainability. 142. Under the present economic condition in the country, the need to equip the managers of TEVT institutions with entrepreneurial skills and a business orientation to pursue cost recovery, outsourcing and income-generating projects to broaden the financial base of their institutions is quite critical. This is the prevailing managerial orientation in polytechnics and other similar institutions in such countries as Australia, United Kingdom, New Zealand and other neighbouring countries in Asia. 143. The present managers and key positions in selected institutions that are earmarked to be upgraded to colleges of technology may not be ready to assume the leadership and control of the new organizational framework. It is likely that selection criteria will be needed before initiating the new set of leaders to become real change leaders and also to train them in entrepreneurial management. This is pressing and vital to ensure the success and long-term sustainability of the proposed colleges of technology.

16. Outmoded, Non-standardized Curricular Programs and Course Offerings

144. The TEVT curriculum is outmoded, unrelated to employer needs, is traditional, non-standardized and mostly not registered with TVEC. Most of the TEVT training curricula were introduced under past bilateral assistance projects, leaving behind various legacies on the vocational training systems. These training systems were rigidly designed and were terminal in

character. Although there are exceptions, programming reflects the generic technology approach of the 1950s and is based on the Government being the primary employer of graduates. This reality has changed but most of the TEVT institutions have not. As indicated, public TEVT institutions offer a total of 317 courses ranging from three-month special courses to four-year higher diploma programs. The entry qualifications vary widely from Grade 9 to a pass of the GCE A-L examinations in three subjects in one sitting. The types of award given to students after completion of their programs differ from a National Certificate (NC) to a Higher National Diploma (HND) without any horizontal or vertical connectivity for career development. Some of the traditional and popular courses in the craft-level and technician education programs are Electrical, Mechanical, Civil, Electronic and Communication, Automotive, Welding, Refrigeration and Air-conditioning, Jewellery Manufacture and Design, Accounting, Secretarial, Computer and Information Technology, among others. The Government has tapped the City and Guilds (C and G) of the United Kingdom for the conduct and moderation of selected courses in TEVT institutions for quality improvement using International Vocational Qualifications (IVQs). 145. Courses for women are relatively few but there is no social taboo in their choice of courses. Female students are enrolled in traditionally male-dominated courses such as Civil, Electronics, Electrical and Mechanical. Most of these courses reflect social demands for training but have limited job opportunities for female employment. In addition, only a few female students opt to enrol in technician courses. This is a social problem that is holding back the development and maximum participation of women in economic activities. More course options are needed that are in keeping with the latest technological trends and in overcoming the low social status accorded to blue-collar workers. These courses, to mention some of them, will include Dressmaking and Fashion Designing, Clothing and Garments, Food Processing/Preservation, Chemical, Bio-medical, Mechatronics, Office Management, Industrial Designing and Decoration, Environment, Electronic Publishing, Architecture, Instrumentation and Control, and Computer. There are employment potentials in the tourism, hotel and restaurant and catering industries but no higher-level technical courses are offered to support the expanding needs of the sector. 146. On the other hand, private providers of TEVT are diverse and duplicative in their program offerings, especially at the vocational training level. Training has flourished into a lucrative business that foreign affiliations have become commonplace among enterprising private training providers. Then again, there is a strong convergence of courses in the field of computer and information technology. Most of the prominent IT training centres have affiliations with international universities and bodies for their programs ranging from modularized diploma courses to post-graduate degrees. The courses are externally moderated and marked for the award of the appropriate certificate or diploma. These courses have not been properly registered or accredited by any Government or professional body for purposes of quality control and regulation. However, external affiliation when it is with reputable institutions or organizations suggests some level of standards. 147. In addition, a major drawback of the present TEVT curriculum design is its inherent weakness to develop generic skills which assure a competitively learning worker. Pass-outs are finding difficulty in getting jobs for lack of communication skills, particularly in English, and positive attitudes towards blue-collar work. These are major barriers that have to be taken seriously in curriculum updating or revision.

17. Poor Condition and Utilization of Physical Facilities

148. The buildings of all TEVT public providers are in a poor physical state due to a lack of financial provisions for regular maintenance. There is widespread under-utilization of space due to poor planning of academic programs. Staff shortages, especially among the senior and qualified training staff, have led to weak management including a rapid deterioration of physical facilities. Since the majority of teaching staff are only on a visiting basis and the non-teaching personnel are untrained, the attention paid to equipment has been highly inadequate. The equipment provided under the past ADB projects are now outmoded and most of them need repairs which cannot be done due to lack of recurrent fund. The lack of after-sales service and spare parts has rendered a large number of equipment unusable.

18. Shortage of Qualified and Highly Motivated Training Staff

149. Overall, the existing teaching personnel are neither sufficient in number nor particularly qualified. The teacher-student ratio based on enrolment is about 1:32. A good number of trainers are visiting lecturers whose fees are very nominal. A recent study conducted by TVEC15 on the training staff in major public providers revealed that 66% of the 1,774 respondents were male, mostly in the age bracket of thirty-one-fifty years (62%). About 79% of the staff possessed a six-month Technical Certificate or a two-year Technical Diploma as their qualification. About 36% of the staff did not have any pedagogical training while 50% had teacher training of less than three weeks in duration. Only 13% of the training staff had undergone industrial training after joining the public service. 150. Staff competence is a major issue that the TEVT system has to address and for which it should seek strategic solutions. Majority of the present pool of teachers are Diploma and Certificate holders who lack the appropriate trade skills and industrial experience, methods and psychology of learning, student assessment and evaluation, and teaching practicum. Addressing these serious weaknesses should receive top priority to insure the sustainability of any planned change in the TEVT system to improve the quality of training and the efficiency of TEVT institutions. 151. The available facilities for technical teacher training are limited. At the moment, there is no institution in the country that addresses the pre-service education of TEVT teachers. National Institute of Sri Lanka (NITESL) has no capacity to meet the staff development requirements of the TEVT sector due to lack of resources such as qualified teacher trainers and training technologies. There are no basic degree programs to raise the qualifications of technical teachers to the professional level both to address the lack of pedagogical skills and the need for higher remunerations. 152. The pay is a big issue on the motivation and mobility of staff. One problem of the TEVT system is its inability to attract highly qualified staff to join and teach courses in the new and emerging technologies. The present pay is no longer attractive, resulting in low qualifications, low motivation and a shortage of experienced and appropriate staff.

15 Tertiary and Vocational Education Commission, Ministry of Tertiary Education and Training, The Study on

Manpower Situation and Training Needs Analysis of the Trainers in Major Public Sector Training Agencies, October 2003.

19. Traditional Program Delivery and Quality Control 153. Most of the TEVT courses are handled like traditional academic subjects and not much can be done to carry out the practical application of theories as far as the formation of practical skills is concerned. This is due to the lack of appropriate equipment and the dearth of training consumables in the workshops and laboratories. Because of the lack of industrial exposure, the teaching staff cannot competently operate some of the fairly advanced equipment in TEVT institutions. Under the present conditions, tutorials and remedial work to assist the students in their learning difficulties are not possible. The formative and summative assessment of student performance and achievements are not focused on measuring competencies required for employment. The use of multi-media, which is becoming a common tool in training delivery and facilitation, is barely available in TEVT. In short, training delivery is very traditional with little movement towards a more flexible delivery of certificate and diploma programs as done at the Open University of Sri Lanka (OUSL) and by other private providers with foreign affiliations for their training programs. Employers have little involvement in the specification of training contents, design of training delivery and assessment of competencies of training outputs. As a consequence, employers tend to avoid the trainees and services of public TEVT institutions and avoid them entirely when they source out their workers and when they contract for training places to upgrade the skills of their employees. 154. Appendix 8 presents the problem tree that was drawn from the cause and effect analysis of the irrelevance, inefficiency and ineffectiveness of the TEVT sub-sector with particular focus on higher-level technical skills development. F. Opportunities in the TEVT Sector for Possible Interventions

1. Incentives for Change 155. A system change is the most complex of processes. Experience has shown that incentives drive change. The central direction given to institutions or systems will be frustrated by inaction, interference and inertia of rest without any corresponding incentives. An opportunity exists to provide financial and other incentives to the public system to encourage change. If a voucher mechanism is created which allows students to use their awards in approved public institutions, a surplus of funds will be created in those institutions to improve working conditions and training facilities. However, consistent standards for all providers are required to ensure that students and employers will have the confidence that the quality of the programs in all approved institutions is acceptable by industry. Thus, a national quality assurance system can be established building on the work of the current SDP. As increased revenues flow to contract teachers and others in the public system, performance will improve and the energy of the system will be stimulated. 156. Incentives may also come in the form of additional resources for new equipment and refurbishing facilities. As institutions become more attractive to students and industry, revenues again will increase and the system will become sustainable at a lower level of direct Government funding and a higher level of participation for the beneficiaries.

2. Student Selection for Technician Training 157. A technician training system must be designed to bring well-motivated young men and women to work in industry who are properly prepared for employment. The present system is

designed primarily to accommodate GCE A-L graduates who do not qualify for university entrance. 158. Building the technician system on GCE A-L who have the aptitude and right motivation will change this. Financing through NTA scheme and soft loans the GCE A-L graduates who qualified for admission to undertake technician education that leads to employment is a key element in the scheme. Promoting technical education and careers in technology will contribute to changing the image of technicians. The challenge is that many GCE A-L graduates come from poor families and are not able to attend school beyond the first thirteen years of schooling. The present bursaries are limited in numbers of recipients and not even sufficient to sustain them in school. Such students cannot afford private sector education and the underdeveloped public sector technician training does not prepare them for gainful employment. With a selective admission process, those qualified GCE A-L graduates would be well prepared for the colleges of technology.

3. Giving Industry a Leadership Role in TEVT 159. The opportunity exists to develop a financial mechanism to induce industry to take a leadership role in the design and delivery of TEVT programs. By providing financial resources directly to employers to undertake the technician training of their existing employees, employers will get the job skills they require. By encouraging them with financial support to form partnerships with public sector institutions, all aspects of technician training can be provided. By supporting industry sector associations to form partnerships with public or private TEVT providers, industry can determine the program standards for their industry as well as determine the total industry requirements for technicians. Industry often has under-utilized facilities which can quickly be made available for technician training programs using existing industry experts as trainers. Often there is a need for a few skilled technicians in a narrow technology. Under these set-ups, a full program in an institution makes no sense, as the demand will be limited. Instead Industry can undertake this training as the standards are international and are technology-driven. A program that industry funds directly would be effective. GCE O-L and GCE A-L graduates would then be given NTA scheme to attend such training after final selection by industry.

4. Upgrading the Existing Workforce 160. Upgrading the skills of the existing workforce is an effective mechanism to increase productivity by using existing and new technology more effectively in the workplace. New legislation will transfer a portion of the corporate tax to a HREF to assist industry in this undertaking. These funds may be used to improve industry-training facilities, acquire training equipment, and tailor the curriculum to an industry-validated standard and support training costs. Custom-designed training can be flexibly drawn to meet the needs of the workplace. Proposals for such training can be evaluated and selected in a competition to ensure that resources are utilized under the best circumstances and that a balance is maintained among industries and regions.

5. Promoting Public-Private Partnerships 161. Partnerships between industry and public education institutions are possible if incentives are made available for both parties to form such partnerships. Both parties bring assets to such linkages. Industry can provide program standards and curriculum validation as well as access to practitioners in technology at advanced levels, work experience and employment. Institutions

can provide the training venue, some equipment, theory and ancillary subjects as well as management continuity to ensure standards are met and students supported academically. 162. Beyond this, industry can form clusters in sector associations, which can represent the skills needs of the sector. Entire institutions can be managed by the sectors to ensure that all activities lead towards employment opportunities across the sector. Experience indicates that when a sector sees an institution as its own training facility, a new level of cooperation and generosity is achieved. Industry can manage a section of an institution or the wings of several institutions to achieve a similar impact. 163. Beyond this, private sector providers can enter into partnerships with public institutions in which the private sector partner takes over the institution or parts thereof between 3 pm and 9 pm each day and weekends to offer technician programs to fee-paying students. If loans were available to the private sector partner to improve equipment and facilities to meet quality standards and when NTA students/grantees can be admitted then the repayment of loans would be facilitated and an improved quality of training is assured.

6. Expanding the Technician Training System 164. The existing HNDE system is supply-driven and institutionally focused. This can change with the reforms planned over a given period of time, at least in the proposed colleges of technology. However, private sector providers have demonstrated that they can provide training based on industry’s skills demands more quickly and effectively. Although clustered in the information technology sector, private sector providers have indicated their willingness to expand into other sectors if incentives are there to do so. A program that provides loans to private sector providers to improve and expand present training efforts in the target areas and to expand into the new high demand areas would be effective if firmly linked to industry sector validated standards and curriculum and to a national quality assurance system. Once the required standards are met, the private training providers would be eligible to accept NTA scheme students and the revenues they represent. At the same time they could accept fee-paying students. By supporting the expansion of private sector providers, Government might reduce its role as the main provider of TEVT and concentrate more on quality assurance and finance. 165. An opportunity arises to use financial incentives to draw more private sector TEVT providers into technician training. By making funding available to providers as loans to improve or expand their training equipment, existing competent providers can be expected to move into newer high demand technologies. By creating a voucher system, students can make a choice as to which institutions to attend based on the distinct competence and performance information of those institutions. By encouraging employers with financial incentives, partnerships between employers and providers can upgrade and use existing surplus factory space to provide hands-on training while institutions can provide the theory background.

7. Incentive-Driven Public TEVT System 166. An opportunity exists to begin the redirection of public TEVT institutions from being supply-driven to being demand-driven and market-responsive. The process selected should assist institutions to master the characteristics and behaviours that they will be required to demonstrate to survive and grow in the new partnership-based world of TEVT institutions. Traditionally, TEVT institutions have been centrally directed and micro-managed by Government. As such they become supply-driven and can in no way be responsive to the needs

of industry for skilled technicians or individuals who want to improve their income and find secure employment. The process of converting public institutions from being supply-driven to demand-driven is well documented and a rich reservoir of experience is available from which to draw inspiration. An effective starting point will be to institute a Human Resource Investment Program to be made up of grants to selected public TEVT institutions and technical assistance packages to help the award winning institutions to comply with the conditions of the Grants. The process will take the form of a national competition open to all public sector TEVT institutions. They will be invited to find an industry sector partner and with the partner, develop a proposal for the restructuring of the institution to become a demand-driven, industry-directed, technician skills level training facility. The HREF will provide such a facility to private sector providers and it is expected that they will readily respond, as they have been market-driven since inception. However, the task is much more complex in public institutions and requires substantial support and coaching in many competencies as will be provided under the HRIF.

8. Performance-Based Institutional Finance System 167. A new institutional financing system is required which provides incentives for institutional efficiency and effectiveness and allows Government to steer institutions in strategic directions. Such a system can be based on each student having a financial value and institutional budgets being built on a certain number of auditable students being enrolled. As an example, if each full-time student in an approved program attracted SLRs100,000, the institution could then maximize its efficiency by having more manageable class sizes. It could also allocate portions of the revenue per student for equipment, supplies, maintenance and other costs. The institution could then hire part-time, well-qualified teachers at competitive salaries to meet TVEC program standards. The institution could improve its performance sufficiently to meet all program quality assurance standards and become eligible for HREF National Training Annual Scheme (NTAS) students and further increase its revenues. 168. Government can also provide student-based funding on an audited annual basis so that student retention is fully funded and weak student retention is penalized. Further, part-time credit programs at the technician level could be equally funded on a full-time equivalent (FTE) student basis to encourage the development of credit programs after 3 pm each day. The level of this funding needed might be less as fees can be charged from the students. 169. If there was a desire to expand programming in one technology in response to Industry demand, the Government could offer a bonus level FTE for three years to help institutions adjust to the new opportunity and to adapt equipment or facilities or form partnerships with industry to provide the required training. Equally, if there were students with special needs, an increment might be added to the unit funding for these individuals. 170. A key factor in this process is that institutions must be allowed to keep the excess revenues after expenses to be used for institutional needs whether for salary enhancements of non-government employees, equipment, marketing or public-private partnership development. A Board of Management might be required to support this process. By doing this, Government would steer the system through incentives rather than by micro-managing the institutions.

9. Industry-Validated Technician Standards 171. An opportunity exists to take a new and effective approach to technician standards. As noted, in most technologies there is only one international standard as technology itself drives the process. Therefore, it makes much more sense to identify best in class standards and

acquire them. New Zealand, Singapore, Malaysia and the United Kingdom all have program standards for the technician level that is well respected. Experience with City and Guilds has already tested this process. If TVEC convened a sector association meeting and reviewed this acquisition process and then engaged the sector to validate the standards and the accompanying curriculum, the process would be shortened by many years and a permanently updated curriculum would be assured, as the supplying authority would be responsible for updating the standards and the curriculum for its own students. The key is international benchmarking and industry validation. 172. However, setting the standards and validating them will not be effective unless they are implemented evenly in the institutions. Also, a quality assurance mechanism is very important.

10. Educational Management Information System (EMIS) 173. With the projected retooling of a number of institutions into industry-driven colleges of technology, the opportunity exists to develop a small EMIS that can gradually be expanded to include other institutions. By assuring the Government of a reliable and timely flow of data, Government in its turn can be more comfortable in shifting day to day decision to their institutions. Financial performance relative to the budget and to student numbers can be reviewed on a regular basis. Timely provision of institutional data to Parliament would be achieved. Better budget planning will result. There will be no more need to go to the expense of custom designing an EMIS. Experience shows that off-the–shelf systems meet the majority of requirements and that systems maintenance is simplified through staff training. The overall development and implementation time is minimized and long-term system development is left to the software writers who own or have a commercial interest in the proprietary software. It is a strategic objective to interface the EMIS with ongoing projects and existing MIS for operability and cost-effectiveness.

11. TEVT Quality Assurance 174. By law, the responsibility of setting up the NVQ framework, quality assurance and accreditation systems rests on TVEC. NVQ is a national recognition system of qualification such as the HNDE. The technician diploma program as proposed in the HRIP will be at Levels 5 and 6 in the NVQ framework. Appendix 9 presents the draft NVQ framework for Sri Lanka which is being worked out by the ongoing SDP and TVEC. 175. TEVT quality assurance is expensive, requires highly trained and independent specialists and has a total impact on the ability of providers to earn revenues given that institutions who do not comply with the requirements within the given time period are prohibited from offering their services as trainers. An independent and voluntary quality assurance system has been demonstrated to be effective in the Philippines and other countries. A Government-controlled system has been demonstrated to be subject to political interference and a gradual disassociation from industry input. The opportunity exists for TVEC to support the development of an independent, self-funded, provider- driven quality assurance system for which it provides supervisory functions. For this purpose, when TVEC works with the industry sector councils it will acquire internationally-accepted program standards and be assured of industry validation. After TVEC endorsement, the standards would be endorsed to the national association of TEVT providers (NATP) for enforcement. 176. The NATP would be established by the TEVT providers and funded through membership fees. To make membership attractive, membership and compliance with program standards

would be a requirement before an institution can access HREF funds. NATP would establish registration standards relating to minimum institutional input standards including adequate provisions for female students. Institutions would then be required to follow TVEC endorsed standards for any programs where HREF or other Government funding was sought. Over time, public institutions would be required to meet and adhere to these registrations and program standards, as well. 177. NATP would audit institutions for registration and program standards compliance through a team of auditors. An audit team would usually comprise one NATP auditor, one representative of a peer institution and one technically qualified individual nominated by the Industry Sector Council. TVEC could at any time depute its own auditor to the team of auditors in order to perform sample audits to meet its overseeing mandate. 178. Institutions would be given one year from the time of joining NATP to comply with institution registration standards and during this time it will already be eligible for HREF funds if evidence of progress towards compliance with the standards is evident. Institutions would be required to be program-compliant within three years of registration for it to continue to be eligible for HREF or other Government funding. Institutions found to be not in compliance would, after a suitable period in which to become compliant, be struck off of the HREF eligibility list. Public institutions would receive special support through TVEC to reach the standards given the distance these institutions must cover to meet any reasonable standards. 179. NATP would be governed by an elected board, which would establish a constitution and a series of ethical standards. The board would select a director. TVEC would appoint one voting member to the board. International technical assistance would be required to assist in this and to act as interim director for several years to ensure that the reputation for effectiveness and transparency was developed. NATP would provide support and training for TEVT providers to achieve compliance, would seek out and assist new members and would promote the membership to industry and to the employers of foreign workers. NATP would publish each year a list of members who were quality compliant and include those programs in which the members are also compliant and thus eligible to receive HREF NTAS students. Fees might be set as a percentage of all HREF revenues received by a member institution or alternately as a flat fee based on declared revenues.

12. Overseeing of the Quality Assurance System 180. TVEC would have one appointee to the NATP Board to oversee operations and to provide inputs on any emerging issues. TVEC would also receive technical assistance to train up to five education auditors who will accompany NATP compliance teams in random checks of institutional members for compliance with registration and program standards. Among its other duties, TVEC would ensure that international program standards were identified in all priority growth areas and validated by national industry standards through the Industrial Sector Councils, the organization of which it would support where they do not exist now. NATP would transmit to TVEC annually a list of members and member-offered programs that were quality standards compliant. TVEC would then transmit this list to the HREF Council. An audit team made up of one NATP auditor, one TVEC auditor, would settle any differences between NATP and TVEC, and one technical specialist in the programs being reviewed, each appointed by TVEC and NATP. Ultimately, TVEC is the apex authority in this area.

13. Social Marketing and Career Guidance 181. As previously noted TEVT has a negative social image and is an unattractive educational alternative. This attitude may not be easy to change, but the experience of other neighbouring countries suggests that a consistent public education and promotion campaign can have some positive effects. Through TVEC, such a campaign would be outsourced to an advertising agency and would include meetings with the advertising industry to influence the image of technician models used in all advertising, informational packages presented in the career development centres put in place through SDP, and through JobsNet, rural information packages in Sinhalese and Tamil aimed at parents, and a special media promotion of the award scheme shall be developed as a national technology awards program. Partnerships among industry sector councils would be sought and the support of individual companies could be a factor. By using positive images of successful female technicians and success stories from minority group members, some positive changes in technician enrolment from these groups might be achieved, as well. In addition, there will be career guidance clinics and vocational counselling programs on various occupations, career and job information, career planning and mapping for students, unemployed youth and disadvantaged groups and even job placements. These will be carried out in collaboration with existing career and guidance centres of feeder schools and accredited TEVT institutions.

14. Governance at the Institutional Level 182. Institutions respond to the boards that govern them. If governance is directly from Government, institutions become supply-oriented. A governance structure, which has a strong industry representation, will have the needs of the employers as a guiding principle. Equally, if industry feels that the institution is their own college addressing their own needs, their interest will be greater and support levels higher. If industry is able to directly influence what is taught, to whom it is taught and who teaches it, the graduates will be more likely to meet their needs. By the same token, if there is some community representation in an institutional governing board, the institution is much more likely to respond to the needs of the community with part-time programs. Government institutions may have little experience in reaching out to industry and communities to meet their needs and to generate revenues in the process. A private sector-dominated board can support this process. Governance with majority representation from industry and community is therefore a first step in redirecting public institutions to have a board that can take the responsibility of managing earned revenues on behalf of the institution and reinvesting it in improvement projects and enhancing staff benefits, ultimately becoming demand-driven and market-responsive. MTET will transfer accountability to the Boards of Management for institutional management and be supported in overseeing the institutions with the EMIS system. The HRIF will provide technical assistance to support the development of such boards in institutions winning an HRIF Award.

15. Strategic Planning 183. The opportunity exists to bring all stakeholders in the industry and TEVT institutions together in a single mission and direction. The development of a strategic plan is the cornerstone of coherent TEVT institutional management and hence, of the HRIF application process and NATP membership. Each board of management will be responsible for the development of a comprehensive strategic plan which analyses institutional strengths and weaknesses and then develops an operational plan to implement the programs selected for development. The process involves the industry, the community, staff of the institution and its students. The development of the plan is led by the institution head and is submitted to the

board for approval. Substantial technical assistance will be provided to the RFP that will then proceed to the second round in developing the strategic plan. A board of management approved strategic plan is required as part of the HRIF Stage 2 proposals.

16. Financial Planning and Management 184. Government managed institutions need basic bookkeeping skills to track and record expenditures. Board managed and revenue-generating institutions require financial planning and management policies as they operate in many ways like a business. As part of the strategic plan, a financial plan and forecast of revenues and expenditures is required. As a part of the operational plan, skills in financial management will be required. Accurate and timely financial data entered into the EMIS shall be for the benefit of TVEC will be important for Council to meet its overseeing mandate. Technical assistance packages will be required to assist institutions in developing financial planning skills. Partnerships which win an HRIF award will be required to meet all ADB financial management and procurement procedures and staff training will be required by HREF-HRIF Administrative Services (HAS) for each award winner.

17. Entrepreneurial Management 185. TEVT institutions must serve the needs of industry to have a skilled workforce, the needs of workers to improve their grasp of the technology to gain advancement, the needs of young people for employment in technician level jobs and the needs of the community for a broader grasp of applied technology. Each one of these requirements leads to an opportunity for TEVT institutions to generate revenues from the beneficiaries. Skills in market identification and the selling of technical skills upgrading programs are often not a part of the talent base of public institution managers; hence, substantial technical assistance will be required to help the shift to become demand-driven institutions. When institutions generate revenues, they are responding to the market. As a part of the HRIF Stage 2 proposal, institutions will be required to show evidence of an entrepreneurial capability.

18. Curriculum Innovation 186. TVEC, working with industry sector councils will establish national program standards. Institutions must then acquire or develop curriculum to meet these standards. In some cases, both the standards and the curriculum can be purchased on a best in class basis from the international market. In some cases, international standards are not available and local development will be required. Both TVEC and the 20 partnership proposals at Stage 2 will require technical assistance in identifying “best in class” standards and curriculum in the world market, to develop a process for industry -validation of these standards and curriculum before passing them on to the NATP for institutional compliance audits. HRIF will require the 20 partnership proposals at Stage 2 to have TVEC approved standards and curriculum in the technologies they are proposing to offer. In addition, HRIF will require that these institutions be registered with NATP, which also requires a commitment to TVEC-endorsed industry-validated standards and curriculum.

19. Equipment Upgrading 187. Flowing from the standards and curriculum will be the equipment required to teach the selected technologies. As part of the HRIF Stage 2 proposals, partnerships will be required to submit equipment lists endorsed by the appropriate industry sector council. Technical

assistance will be required to help institutions identify the appropriate equipment, gain industry sector approval and acquire the equipment following all ADB processes.

20. Facility Renovation 188. Based on the equipment requirements or from the dilapidated state of most of the facilities, some renovations may be required in the partner institutions. HRIF Stage 2 proposal will require a costing of required renovations as well as a longer-term investment plan for facility rehabilitation and maintenance. Technical assistance will be required to cost these minor renovations and to assist in developing a facility development master plan.

21. Staff Training 189. Management and administrative training of the staff of partner institutions staff has been addressed in the previous sections. In this section, it is recognized that new technologies, curriculum and equipment may require additional training of the teaching staff. Much of this upgrading will be done in industry. In this manner, the teachers will not only improve their technical skills but also develop a sense of the industrial requirements both in the skills and attitudes of graduates. In some cases further academic training may be required. HRIF will also require that Stage 2 proposals include a human resources development plan for staff, which will include a strategy to increase participation of the female and minority group staff to more acceptable levels. Technical assistance will be provided to assist institutions and their industry partners to identify appropriate placements and tasks in industry that would lead the staff to be better prepared for the new technologies and equipment as quickly as possible. Such an HRD plan will also be a requirement for NATP registration.

22. Part-time Learning 190. The facilities of TEVT institutions are used only up to 3:00 pm, five days a week. Therefore, there is space for part-time learning program offerings. A key issue in revenue generation is the offering of part-time learning programs that are targeted towards community interests, workers needs for skills upgrading and for adults who cannot afford to undertake full-time technician training because they are already working. Beyond this, part-time education allows the institution to design programs, which will introduce women and minority group members to technology and show the opportunities for careers in this area. HRIF Stage 2 proposals will require a plan for the provision of training programs for part-time learners in the industry partner fields of technology. NATP will require a part-time learning plan for community members as part of registration requirements. Technical assistance will be provided to help institutions undertake community and workforce surveys to determine local needs and interests and then respond with appropriate training packages that meet TVEC standards where those apply. G. Government Strategies and Plans in Development 191. The Government framework for economic reform and poverty reduction strategy is embodied in the document entitled Regaining Sri Lanka: Vision and Strategy for Accelerated Development, which is the centrepiece of the present Government in its pursuit of higher economic growth. Its goal is to achieve a sustainable 8%–10% growth over the next few years that will free the country from deep foreign indebtedness. The economic crisis confronting the country is addressed through a four-pronged approach by the Government:

(i) increasing employment – creating two million jobs; (ii) overcoming the public debt crisis; (iii) resources for reconstruction; and (iv) increasing income levels – higher productivity and increased investments.

192. The rallying point of the economic program is to improve productivity in all sectors to encourage investments and economic growth. It recognizes the need to redefine the relationship between the public and the private sectors. The private sector has a major share in accelerating economic growth, increasing jobs and incomes, and providing the resources that will be required for reconstruction. The Government’s role will be to provide a level playing field to create a favourable environment for investments and competition. 193. The role of human development was given due importance in the economic programs in order to achieve the goal of creating two million new jobs. This will be achieved by preparing people for employment and by increasing the efficiency of the labour force, to wit:

The systems providing tertiary education will be significantly expanded and strengthened. An important gap in the training of the country’s workforce is limitations in providing technical and alternative forms of tertiary education. Additional sources of re-training and ongoing education will be increasingly important in increasing productivity throughout the economy. These are services that the private sector is well suited to supply and greater opportunities for investment in these areas will be provided.

194. The Draft National Employment Policy (Initiative 2: Education and Training for Life Long Employability) stresses the importance of skills, knowledge and talents as the competitive edge for both individuals and businesses in a rapidly changing environment as jobs will demand higher levels of competencies and abilities. Continuous learning will be the key to life-long employability. The people need to be highly trained and fully equipped to meet the requirements of the new era. There will be a need to restructure training to be demand-driven. 195. The Millennium Development Goals, which Sri Lanka committed itself to in 2000 together with the 191 United Nations member states are to combat poverty, hunger, disease, illiteracy, environmental degradation and discrimination against women. The eradication of poverty and hunger is the overarching goal. The target is to reduce by half the percentage (6.6%) of the population who lives under extreme conditions of poverty, whose income is less than one dollar a day, by the year 2015.

1. Economic, Industrial and Investment Policies 196. The Government economic policy centres on the need to create about two million job opportunities in the medium term. This would satisfy the employment demand from the new addition to the labour force as well as the currently under-employed. An Increase of employment opportunities would also help those already employed but who seek more remunerative and productive employment. Although some of these opportunities will be in self-employment, a substantial share of projected employment is expected from paid employment. With about 60% of paid employment out of a total employed labour force of 6.2 million, the expected increase would be about 50% of the current paid employment in both the public and private sectors. This is certainly a difficult task and the Government is turning to the private sector to take the lead to increase the level of investments on manufacturing and related activities, and on services including tourism and trade.

197. Sri Lanka has one of the most liberal and foreign investor friendly regimes in Asia. However, the flow of foreign investments has remained well below its potential since the transformation of the economy from a closed to an open economy in 1977 with increasing focus on private sector role in a growth-oriented development. The ethnic conflict that heightened in the early 1980’s and continued until the early 2000 undermined the flow of investment to manufacturing and services, the two main areas of foreign investments. Annual Foreign Direct Investment (FDI) inflows averaged less than 1% of GDP in the 1980s, increased to 1.2% in the 1990s and it peaked at $430 million in 1997 during the privatization programs. However, it fell again in 1998–2001 due to unresponsive Government policy towards privatization and poor economic management of the previous administration, combined with the worsening security situation. 198. At the end of 2000, the FDI stock was estimated at $2.5 billion or $127 per capita. This was seven times the per capita level of India, but only 5% of the per capita level in Malaysia. About 50% of this total was in the service sector, 19% in textile and garment and 9% in the food and beverages. Chemicals, non-metallic and fabricated metal industries accounted for the balance. 199. During the post-peace era, the BOI anticipates direct foreign investments increasing to over $500 million per annum, compared with $83 million in 2001 and $240 million in 2002. Power shortages, inadequate highways and poor road networks particularly outside Colombo, and supply shortfalls of affordable housing are some other factors that need to be addressed to maintain FDIs at the levels expected by the BOI. A shift towards infrastructure projects such as power, telecommunications, construction and highways is receiving greater priority to stimulate the international flow of investments. Again, the Government is inviting the private sector to play a key role in the provision of such facilities. The latest budget of the Government reiterated its commitment to accelerate the privatization process to encourage increased private sector participation in the acquisition of public assets and to manage them more efficiently. 200. A number of other policy measures have been included in Regaining Sri Lanka, the policy document, which describes development priorities and proposed policy interventions. These include:

(i) make opportunities for training and education for productive employment; (ii) reduce the size of the public sector employment, which currently stands at

around 1.2 million. The 2003 budget announced a voluntary retirement package and the Government expects at least 300,000 to accept this offer;

(iii) introduce economic reforms to remove trade barriers, ownership of land and regulations not strictly necessary for public health, safety or maintaining security;

(iv) promote the private sector to provide the services that the Government now provides either through public private partnership or private contractors;

(v) maintain low interest rates to encourage investments; (vi) establish trade agreements to support domestic production to enhance entry into

international markets; and (vii) relax rigid labour regulations and introduce some flexibility in recruitment and

termination policies. 201. The Government is also pursuing a balanced regional development policy by dividing the country into five economic zones and providing basic infrastructure facilities in selected centres in each zone. Two objectives are targeted under this policy. First is to shift manufacturing

activities out of the western region, where there is currently a heavy concentration of such activities. Second is to increase non-agricultural development as a means of diversifying rural economies, reduce dependency on agriculture and create more productive employment for the rural population. These are the key policy interventions aimed at a growth rate between 7% - 8% to in the medium term and about 10% in the long term. Given the performance of the economy after the signing of the peace accord, achieving a growth level of this magnitude may not be difficult if peace continues to hold and if proposed economic reforms and other policy interventions are efficiently implemented.

2. Human Resource Development Policy and Thrust 202. The Government's policy and plans on human resource development have also been spelled out in Regaining Sri Lanka drawing on the report prepared by the Ministry of Human Resources and Technical and Vocational Education whose functions have been taken over by the Ministry of Tertiary Education and Training (MTET). Among the objectives of these plans are to:

(i) establish a Higher Institute of Applied Technology to lead the TEVT process and to provide a recognized system of professional certification in the vocational trades;

(ii) establish an independent accreditation authority for quality control and standard setting functions;

(iii) strengthen tertiary education programs in fields such as business management, computer science, engineering economics and natural sciences;

(iv) raise academic standards in the universities by introducing department- and faculty-based performance review systems, tracking systems of graduate employment, expanding professional training opportunities in existing post-graduate institutes and upgrading the management skills (including financial management) of university administrators;

(v) create endowment funds in each university for the hiring and placement of all staff.

(vi) extend quality control supervision to the private tertiary education institutes; and (vii) expand university offerings to meet public demand, including an expansion of the

Open-University facilities in regional centres for distance education. 203. A number of key areas have been identified to provide advanced training to the younger labour force to assist them in securing jobs in the private sector. These areas are listed in Table 17.

Table 17: Identified Key Areas for Advanced Training Provision 1. Entrepreneurship and business management 2. Welding and fabricators 3. Motor mechanics 4. Agro-based industries 5. Fisheries (especially in the North) 6. Construction 7. Information technology and related areas 8. Handicrafts and cottage industries

1. Nursing/healthcare personnel 2. Communications and media 3. Electrical installation personnel 4. Shipbuilding 5. Heavy vehicle operators and technicians 6. Offset printing 7. Electricians 8. Air-conditioning and refrigeration/plumbers

Source: Regaining Sri Lanka.

204. The Government has also recognized the vast potential of overseas employment for skilled labour. Citing a report prepared by the US Bureau of Labour, estimating new employment opportunities to be close to 50 million jobs worldwide, the Government is prepared to re-orient its training programs to create specific advantages for Sri Lankan workers. Some of the recommendations included in the Draft National Employment Policy include:

(i) training system restructured to meet future demands; (ii) provide skills enhancement for male workers to compete with counterparts from

India, Philippines, Pakistan, and Bangladesh; (iii) provide incentives to recruitment agents to find skilled jobs for Sri Lankan

nationals; (iv) public-private partnerships to provide skills training for prospective migrants; (v) deregulate activities in a phased out manner to enable the worker to negotiate

directly with his/her foreign employer for placement abroad; and (vi) bilateral and multinational arrangements with foreign Governments and private

companies to permute Sri Lankan human capital.

3. Private-Public Partnerships 205. Public-private partnerships are being promoted and supported by the Government as one of the strategic solutions to accelerate and sustain economic growth. It was spelled out that the responsibility of the Government was to create the environment for rapid economic growth while the responsibility of job creation lies in the private sector. The Government is committed to building private-public partnerships by mobilizing all sectors. Efforts are being made to encourage the participation of the private sector in providing TEVT and to further expand the private sector’s role in this field. This can be facilitated through the provision of incentive-driven packages such as soft loans and grants to the private sector. 206. There are a number of active trade groups and associations in the private sector such as the Ceylon Chamber of Commerce (CCC), the National Chamber of Commerce (NCC) and the Federation of Chambers of Commerce and Industry in Sri Lanka (FCCISL). The FCCISL is the apex organization, which was established in 1973, with memberships from 37 trade chambers and associations. With the private sector being identified as the engine of growth, the role of FCCISL members has been very extensive becoming involved in almost every major economic endeavour. The Federation plays a major role in articulating the macro policies for overall private sector development and contribution. The FCCISL serves as the link between the private and the public sectors. Such partnerships can form the bases of a much more effective system driven by employers, financed by beneficiaries and leading to employment. The Chambers of Commerce can act as a vehicle to access industry but it is vital that first line employers be involved in the planning and operation of these facilities to ensure they are not once again training for unemployment. 207. The NAITA linkage with industry appears to have been particularly effective in creating job placement opportunities for students. Industry-based institutions clearly make employers feel that they are part of the training team and reduce resistance to supporting further activities. Sector-based institutions in fields such as textiles/garments (Phoenix) seem equally effective in reducing employer reluctance to make specific investments in workers who will use the training to access an out of country job. The Chamber of Commerce can act as a vehicle to access industry but it is vital that first line employers be involved in the planning and operation of these facilities to ensure that the training offered will lead to sure employment.

208. Public-private partnerships can be initiated by SLIATE and in the process devolved the management of some institutions to a Governing Board (which it can appoint) made up of employers either on a regional or on a sector basis. Then the college sells its competence in the marketplace with the Government becoming a "'customer" by tendering training and buying from the most effective supplier. The staff of the institution share in the revenues generated and such incentives will improve staff performance and morale (and availability) over time.

a. The JobsNet Project 209. The JobsNet Project (National Employment Sourcing and Delivery System) is a working example of private-public sector partnership. As a national project, the Ministry of Employment and Labour partners with the CCC to harness the support and active involvement of the private sector. The project is part of the implementation of the National Employment Policy (Initiative 7: Creating an employment sourcing and delivery system), which became operational in May 2003. It is an on-line referral system with a website (www.iobsnet.lk) being managed by the CCC for jobseekers, local and foreign employers and self-employment seekers. It provides referrals for jobs and training, information, advice and career guidance. 210. The development objective of JobsNet is to contribute to poverty alleviation, employment promotion, private sector development, and peace and reconciliation. JobsNet’s vision is to effectively facilitate the process of making Sri Lanka to be a provider of globally employable and competitive human capital with the singular aim of enhancing and sustaining the qualitative standard of living of all Sri Lankans. It has precisely stated its mission, to read:

To develop and implement a service facility for seekers and providers of all employment including self-employment, through the use of modem info communication based interactivity, upholding the values of meritocracy and transparency.

211. So far, JobsNet has keyed into its database about 65,000 job applications. It has set up seventeen district centres and has matched 10,000 jobs with a total of 500 already recruited. JobsNet found out that most entry-level jobseekers who have no experience, professional or vocational training prefer to be employed in white collar jobs which unacceptable to the private sector. There is high expectation among the jobseekers compared with their low level of skills and qualifications. By and large, there is a lack of career guidance and knowledge on the prevailing jobs in the job market among the jobseekers. 212. JobsNet has entered into an agreement with DTET and will soon sign a separate Memorandum of Understanding with VTA and NAITA, respectively, to link training courses conducted by the three institutions with the national job referral system.

b. Sarasavi Saviya Programs 213. Another private-public sector partnership, which can serve as a model for the TEVT sector is the Sarasavi Saviya programs. These programs are part of the World Bank Project for Improving Relevance and Quality of Undergraduate Education (IRQUE). The Ministry of Employment has appointed the Sarasavi Saviya Tharuna Aruna II Board of Directors to oversee the implementation of the programs, which comprise intensive training of unemployed graduates from universities under the age of 35 with private sector participation. The graduates who are placed in companies are entitled to a monthly allowance stipend of SLRs4,000 from the Government and SLRs2,000 from the receiving company. In addition, any participating

unemployed graduate who will pursue enhancement courses through the programs will get SLRs40,000 in voucher redeemable only with the accredited training providers.

c. Partnership for Skills Development in Australia and New Zealand 214. The strategy of Australia and New Zealand for vocational education and training (VET) was articulated in the national VET strategy of collective commitment by the Governments in partnership with industry. Broadly, the partnership was implemented through the establishment of representative industry bodies during the 1990s. In Australia, these bodies were put up as part of the drive to make Australian industry internationally competitive while in New Zealand the driving force was reform and coordination of the education and training system. 215. There are now 23 national Industry Training Advisory Bodies (ITABs) in Australia working closely with a network of State and Territory ITABs, in addition to six recognized bodies that carry out similar functions to the national ITABs. In New Zealand, 46 smaller Industry Training Organizations (ITOs) were established, which are now reduced as mergers are taking place. In Australia, all national ITABs are required to be bipartite with representatives from the employers and collective employees. Currently, no Government representatives sit on any of the national lTABs. In New Zealand, the 2002 amended legislation requires all ITOs to develop arrangements for the collective representation of employees in the governance of these bodies. 216. The lessons from the partnerships in VET in these two countries are: (i) the value of having all the social partners involved from the very beginning, (ii) having Government involved but not as a member of the national industrial bodies, (iii) Government marketing of the skills strategy, (iv) over a period of 10 years, VET has been transformed with competency standards and new national qualifications in place, (v) a Trust has been established in New Zealand's ethnic Maori workers which demonstrated the will of setting up a consortium of training providers with close links to industry, and (vi) establishment of a training company with a network of nearly 500 local employers who are able to specify the range of skills needed in a new worker. The training company acts as a broker arranging suitable work placements for jobseekers and school leavers, who very often have no employable skills or qualifications.

d. Institutional Models on Partnership and Sustainability 217. There are a number of model institutions both public and private TEVT providers in Sri Lanka that have achieved success in transforming themselves into self-financing and highly respectable organizations through public-private partnerships, cost recovery, training, research and development projects, consultancy services and strategic marketing of programs and services. To mention some of them, these are the Clothing Industry Training Institute, National Institute of Business Management, Textile Training Institute, Plastic and Rubber Institute, University of Colombo School of Computing, and Phoenix College of Clothing Technology. In addition, the Postgraduate Institute of Management of the University of Sri Jayawardenapura can be cited as a model on financial autonomy in higher education. 218. The main strength of these institutions is in the expertise, versatility, empowerment and high motivation of the professional staff, which is not found in most of the major public TEVT providers. The management of these organizations are dynamic, visionary, innovative and business-oriented. The managers are entrepreneurs, enablers and risk-takers. This is the benchmark upon which the proposed Colleges of Technology sets its vision for competitiveness, leadership and sustainability in technological education and development.

H. Funding Agencies’ Strategies in Education and Training

1. ADB Loan and Technical Assistance 219. The Asian Development Bank (ADB) is the biggest external funding agency in the education sector with investments of about $235 million in eight projects over the past 20 years. Three of these have been in technical education and skills development. Table 18 gives an idea of the external assistance of ADB to the education and higher education sectors of Sri Lanka. 220. ADB has established that the main development challenge in Sri Lanka is to reduce poverty. Reducing poverty is best addressed by reducing the incidence and impact of the known causes of poverty for the greatest portion of the population and by more equitable allocation of social opportunities. The Poverty Reduction Partnership Agreement was signed in March 2002, which endorsed the Government's priorities for poverty reduction and defined ADB's support through economic growth and human resource development. In line with the Government's agenda in Regaining Sri Lanka, ADB strategic priorities in its Country Strategy and Programs 2004–2008 are: (i) promoting pro-poor economic growth; (ii) advancing social development; and (iii) supporting improved governance.

Table 18: External Assistance to the Education and Higher Education Sectors Amount Grant/ Year of ($million) Loan Approval Source

A. Asian Development Bank 1. Loans

a. Technical Education Project 16.1 Loan 1982 b. Second Technical Education Project 36.0 Loan 1988 c. Financial Management Training 13.1 Loan 1993 d. Secondary Education Development Project 31.0 Loan 1993 e. Science and Technology Dev. Project 20.0 Loan 1997 f. Skills Development Project 18.8 Loan 1999 g. Secondary Modernization 50.0 Loan 2000 h. Distance Education Project 45.0 Loan 2003

Sub-Total 230.0

2. Technical Assistance a. Scientific and Technical Personnel Development 0.4 Grant 1995 b. Study on Financing of Social Services 0.4 Grant 1995

Resource Rationalization Action Plan under the Dept. of Technical Education & Training 0.1 Grant 1996

c. Skills Development Project 0.6 Grant 1998 d. Improving Education Planning 0.8 Grant 1998 e. Capacity Building for the Ministry of

Vocational Training and Rural Industries Project Implementation Management 0.2 Grant 1999

f. Secondary Education Modernization 0.3 Grant 1999 g. Postsecondary Education Modernization Project 0.5 Grant 2000 h. ICT Pilot Project 0.7 Grant 2003 i. School Modernization 0.7 Grant 2003 j. Human Resource Investment Project 0.6 Grant 2003

Sub-Total 5.3

Total 235.3

2. Other External Assistance 221. IBRD/IDA has invested $225.7 million in five projects. Among other bilateral donors are the Department for International Development (DFID), German Development Corporation (GTZ), Japanese International Cooperation Agency (JICA), Norwegian Agency for Development (NORAD), Canadian International Development Agency (CIDA), and Swedish International Development Agency (SIDA). Table 19 presents other sources of external assistance in education and training extended to Sri Lanka.

Table 19: Other External Assistance in Education and Training Amount Grant/ Year of ($million) Loan Approval Source

Other External Sources 1. Bilateral

a. Australia 0.6 Grant 1996 b. Canada

CIDA: Project for Rehabilitation through Educational Training (PRET) – NAITA, VTA, Ministry of Labour and Vocational Training i. Phase I 4.2 Grant 1989 ii. Phase II 4.2 Grant 1992 iii. Phase III 3.6 Grant 1997 iv. Phase IV 3.6 Grant 2003

c. Republic of Korea, Upgrading Engineering Equipment of University of Peradeniya 1.0 Grant 1996

d. Joint Germany and Sri Lanka Program Program (Phase I and II) 3.8 Grant 1995

e. Japan Establishment of an Audio-Visual Education Unit 6.4 Grant 1992

f. Sweden Support for Bachelor of Information Technology Degree at the Institute of Computer Technology, University of Colombo 2.4 Grant 1998

g. Norway NORAD: Design of Administration Procedures for Universities 4.8 Grant 2000

h. Sweden Implementation of Administrative Procedures System in support of NORAD with Software 2.4 Grant 1990

Sub-Total 37.0 2. Multilateral

a. ILO: Support for JobsNet at Ministry of Labour 2.0 Grant 2002 b. WB-ODA

i. General Education Project 49.0 Loan 1989 ii. Teacher Education and Teacher Development 64.1 Loan 1996 iii. Second General Education Project 70.3 Loan 1997 iv. Distance Learning Project 2.0 Loan 2001 v. Improving Relevance and Quality of Undergraduate Education 40.3 Loan 2003

Sub-Total 227.7

Total 264.7

I. Lessons Learned 222. The three ADB projects (Technical Education Project, Second Technical Education Project, and Skills Development Project) were designed to address common problems confronting the TEVT sector. Nevertheless there was reasonable cohesiveness and complimentarily of project objectives between the projects, which focused on improving the quality, relevance and efficiency of the TEVT system. The first project focused on the improvement of craft and technician education and training through the establishment of the infrastructure such as the National Technical Teacher Training College (NTTTC), upgrading the management of technical education with the establishment of Technical Education Department (TED) and upgrading of the facilities of selected TCs. The second project mainly supplemented the first project to further strengthen the institutional capacities of the newly established NTTTC and TED and upgrading of other TCs under DTET. On the other hand, the on-going SDP is focused on improving the vocational training system via a shift to a competency-based scheme of skills training including the establishment of basic infrastructure and services needed for effective implementation and quality assurance. 223. The implementation of the first and second loan projects have suffered from delays and complex problems brought about by the transfer of project responsibility from one ministry to another, the difficulties encountered in the acquisition of land, the lack of counterpart funds, the slow appointment of qualified project staff, the unsatisfactory services of consultants and even the under-utilization and poor maintenance of training facilities and equipment provided under the first project. These are essential inputs in project design and loan appraisal to ensure successful implementation of subsequent project objectives. 224. Overall, past and present interventions to improve the quality, relevance and efficiency of the TEVT sector have not been evident in terms of providing better access to women, the rural and urban youth and other disadvantaged groups. The investments did not have much impact to address the mismatch of skills as a result of poor labour market orientation of the TEVT system. The participation of the private sector in promoting, patronizing and sustaining TEVT cannot be clearly discerned. The TEVT system was not prepared to provide vertical mobility and articulation for higher education for the advancement and motivation of the youth. 225. The loans did not deal with several basic flaws in the design of the overall TEVT system. At present, TEVT is supply-driven and institution-based. It has almost no articulation with the labour market and graduates are not prepared either for employment or self-employment. As such, it continues to be only an extension of social policy, not economic policy. The loans attempted to strengthen the centralized provision of skills training by Government rather than strengthen the role of the private sector in identifying employment opportunities and structuring learning to meet employers' needs in areas of projected growth. 226. For the system to respond to employers’ needs, individual institutions must be able to work closely with individual employers. A centralized system with decisions being made in Colombo rather than in the regions will not support an employer-responsive TEVT system. The lessons learned in other ADB projects in Pakistan, Bangladesh and the Philippines demonstrate that a decentralized system responds more quickly and builds public private partnerships more frequently. Public institutions working in a decentralized environment can be directed to generate income by meeting the local training needs of employers. As the institutions generate a greater proportion of their operating revenues, Government can reduce its role as a provider of TEVT allowing private sector or private sector financing to drive the system more directly. Thus decentralization might be considered an important component of any future loan package.

Equally important, the past loans did little to strengthen the concept of beneficiary participation in financing TEVT and thus the sustainability of the system was not addressed. 227. Lessons learned in loans in Pakistan and the Philippines have also shown that student/family payment of fees, however small, increases performance and retention. At some level, fees turn students into customers, buying learning and their demands on the system force quality changes to happen as well. 228. In project implementation, it is vital to accelerate elements upon which the success of other project components depends. The unpredictable arrival of inputs was a major factor in the Pakistan loans. In this project, the earliest possible mobilization of the Human Resource Endowment Fund will be an important contributor to project success. 229. Finally, a key lesson learned is that incentives, not restrictions and directives motivate systems to change. Future loans in this sector need to be based on mechanisms that create incentives for institutions, staff and students to achieve more. Enhanced salaries through sharing in earned revenues will do more to resolve faculty issues than any other single step. Competition with private sector providers for Government training contracts will move institutions into new technologies much more effectively than grant-based equipment shipments as from a loan. Imaginative leadership and a competitive environment will contribute more to effective institutional response to employer needs than any number of committees or additional management staff. 230. A further lesson from previous loans is the challenge of timely financial disbursements and the rapid build-up of project administrative capabilities of the staff in financial management and procurement. In this type of project where a number of competitions will take place and a variety of ADB supported grant/loan awards will be made, the need for an administrative support service that is familiar with all ADB guidelines and requirements in financial management and procurement will accelerate the project. More than 10 awards are expected in HRIF and as many as 150 in the HREF and each award will lead to procurement and will require regular financial reports. A project administrative service is provided in the loan to support both the HREF and the HRIF. J. Relationship of the Proposed Project with Existing ADB Projects

1. Skills Development Project (ADB Loan No. 1707–SRI [SF]) 231. This ongoing Project, known as SDP, has the following objectives:

(i) development of a policy framework for the institutionalization of competency-based training (CBT);

(ii) establishment of a national CBT learning resources development centre at the MTET, learning resource utilization centres and career guidance and counselling centres at the technical colleges and other centres;

(iii) upgrading of Vocational Training Centre (VTC) facilities; (iv) development of twenty new courses and conversion of twenty-five existing

courses into the CBT format; (v) introduction of entrepreneurship and basic management skills courses; (vi) development of skills standards; and (vii) establishment of a NVQ Framework.

232. This Project increases both the efficiency and the competence of Government in the provision of skills training programs. Although it specifically addresses the operations of DTET institutions and the VTA, it nevertheless addresses all of TEVT by initiating an NVQ system. It also introduces the basic academic mechanism for the involvement of industry through the introduction of Competency-Based Training (CBT) and the development of skills standards. CBT is a launched platform to improve the effectiveness of the system by linking it increasingly to industry needs rather than to a university centred academic curriculum. It might also be argued that by bringing any TEVT institution up to a reasonable technological standard, the interest of employers to work in partnership with the institute is strengthened and the ability of the director of the institute to market its training skills to employers is enhanced. 233. The proposed project will build on the work of the ongoing SDP. First, it will further develop the 54 Career Guidance Centres to provide better and timelier information. It will support the development of materials designed to increase the interest of women in technology and to target materials for minority groups. It will build on the National Qualifications System specifically adding NVQ levels 5 and 6 (technician) to the SDP- initiated NVQ 1 to 4 program standards. It will propose an outsourcing of program standards to accelerate the process. The proposed project will accelerate the involvement of industry in TEVT, a direction begun under the SDP by putting in place a public-private partnership-based competition for institutional transformation to TVEC-identified growth directions.

2. Distance Education Modernization Project (ADB Loan No. 1999–SRI [SF]) 234. This new project is intended to support the Government’s human resource strategy laid out in three documents (i) The Future – Regaining Sri Lanka, (ii) Draft National Employment Policy for Sri Lanka and (iii) e-Sri Lanka: An ICT Development Road Map. The Project will help the Government to implement these strategies by modernizing the postsecondary education system, especially through the introduction of distance education and the promotion of public-private partnerships to reduce pressure on public sector enrolment. The Project aims to boost enrolment of conventional public institutions that wish to enter the mixed-mode environment. Within the scope of this objective is the collaboration to produce customized materials for use by distance-mode trainees of COTs. 235. The proposed project has earmarked technical assistance packages to further develop technician theory-based programs in association with the Open University of Sri Lanka (OUSL) while the applications as well as study facilities can be provided on a profit sharing basis by the selected public-private partnership based colleges of technology. Eventually, the proposed project will continue the work of the SDP in developing a ladder whereby technician graduates (those with NVQ level 6 competencies) can move towards a Bachelor of Technology (B. Tech) degree through the OUSL programs or foreign affiliation.

II. THE PROPOSED PROJECT A. Project Goal 236. The project purpose is to support the Government’s vision and strategy for accelerated economic growth, easing unemployment and poverty reduction through enhancing labour and industrial productivity and competitiveness of the economy by establishing a demand-driven, accessible and public-private partnership based TEVT system. This can be achieved by addressing basic systemic problems including lack of national policies, fragmented

administration, insufficient autonomy and mechanisms to calibrate training supply with labour market demand. Secondly, quality and quantity of outputs in critical fields such as higher technical education are needed to increase labour productivity and enhance economic competitiveness. B. Project Objectives 237. The overall objective of the TA is to undertake a feasibility study and prepare a Human Resource Investment Project. The project is intended to support the Government’s poverty reduction strategy and to draft the National Skills Development Policy towards enhancing the country’s skill-based competitiveness. Specifically, the TA is aimed at improving the relevance, effectiveness and efficiency of skilled workers, particularly, at higher levels, as a result of the institutional development activities and major policy reforms to be introduced in the TEVT sector. 238. The following objectives were identified for the proposed Investment Project: (i) making operational the Human Resource Endowment Fund as a springboard for changing TEVT into a public-private partnership based, sustainable system; (ii) strengthen MTET to support a demand driven, employer responsive, public-private partnership based technician education system; and (iii) strengthen the capacity of selected public sector TEVT institutions to become demand-driven and partnership-based COTs so as to respond to the needs of industry for technicians. The Project framework matrix is provided in Appendix 10. C. Project Components 239. The HRIP is made up of two parts: the HREF and the HRIF. The project treats them as two discrete parts; however, they are inherently related since both parts aim to improve productivity through higher-level skills development and to promote the application of modern technology in industry. The key objective of HREF is to provide direct financial assistance to leading industries/manufacturing firms to upgrade production, operation and maintenance technology and train their employees in the application of modern industrial techniques as well as training employed persons in new and emerging technologies. In addition, it also invites the private sector providers of technology education to avail themselves of incentives such as grants and loans to meet investment requirements of these institutions. 240. The HRIF, on the other hand, focuses essentially on improving technician education through the introduction of new and innovative programs for unemployed school leavers in demand driven skills sought by industry. About ten public sector technical institutions supported by industry will be selected on competitive basis as colleges of technology (COTs) to offer these programs and they will receive various incentives from the project to transform themselves into sustainable joint colleges. Three to four of the COTs will be drawn from the North and East provinces to accelerate the development of technical manpower needed for the rehabilitation and economic revival of this conflict-affected region. Furthermore, it will support the strengthening of MTET through capacity building in critical areas such as performance budgeting, technician standards development, overseeing of quality assurance and social marketing and career guidance.

1. The Human Resource Endowment Fund (HREF):

a. Component 1: Making operational the HREF as a springboard for changing TEVT into a public-private partnership-based, sustainable system.

i. HREF-HRIF Administrative Services (HAS)

241. The objective of this component is to select through the ADB Selection of Consulting Firm processes, a consulting firm to support the HREF Council in the administration of the HREF and the MTET in the administration of the HRIF. Deployed in the first month of the loan, the firm through its Team Leader will report to the PIU and operationally, to the Chief Executive Officer, HREF. With four professional staff, the firm will manage all aspects of the competitive bidding processes under HREF and HRIF, administer all supply and services procurement by HREF and HRIF funded activities to meet ADB guidelines, request and receive all applications for grants and awards under both funds, advise the HREF Council on regional quotas, determine the number of grant/loans possible within a year, assure that all ADB and Government processes are followed in the selection of recipients, managing funds, and in the procurement of equipment and services, assure transparency of all operations and assure that all national awards/grants were used in eligible technology areas in qualified institutions. The HREF Council will devise a mechanism to administer the loan portion of any HREF activities and to develop and enforce repayment schedules for the loan portion. The HAS would conduct national workshops for training providers to assist in proposal development and to train project staff in financial management and procurement processes. The project will provide 36 international consulting months and 108 national consulting months to support HAS.

ii. The National Technology Awards Scheme: Technician Education Programs

242. The objective of this component is to increase the number of technicians, taught to international program standards, that are available to industry and to improve accessibility of technician education to women, minority groups and the poor who meet the merit standards. To achieve this, it will provide national technology awards (NTAs) to eligible GCE A-L graduates (or those reaching an agreed level in an NVQ system), to enable them to earn a technician diploma over a 2 ½-year period (or competencies at NVQ levels 5 and 6 in an NVQ system), identified by TVEC as an area of economic growth. It is anticipated that at least 50% of award holders will attend private sector TEVT. The NTA has a value to be determined by the HREF Council plus a stipend per year for up to 2.5 years of study including six months of industrial training. The NTA scheme is designed in such a manner as to steer the TEVT system into being more demand-driven and employer responsive. Approximately 10,000 for full-time awards and 8,000 for part-time and flexible time awards will be granted over the 5 years of the loan.

iii. Corporate Programs: HREF In-Industry Graduates Training 243. The objective of this component is to develop an employer responsive, in-industry technical training to meet urgent requirements to provide a limited number of skilled workers in unique technologies. Both GCE O-L and GCE A-L graduates are eligible. TVEC working with industrial sector councils may identify a specific need for small groups of technicians in economic growth sectors, which cannot easily be addressed by existing TEVT providers. For their part, the Government has identified areas of future growth in which there are few current employers and hence, little expressed need for training. In response to a HAS prepared

Request for Proposals (RFP), joint proposals pairing industry with a NATP member will be encouraged for combination work-study programs. Beginning in the second year of the project, this component will provide grants to groups of 20 trainees for training of up to 12 months duration. Grants will have a unit value per trainee to be determined by the HREF Council. Twenty loans of up to $25,000, depending on the number of trainees and the technology involved will be available for staff development, equipment procurement, rehabilitation of existing facilities, technical assistance, adjustments to improve access for disabled students and purchase of international standards and curriculum. Procurement will be by media publication of RFP from industry or industry/provider teams. Up to 20 training projects, together involving up to 500 trainees would be supported. Technical assistance through HAS will be provided for proposal development.

iv. Corporate Programs: HREF Employee Training Programs 244. The objective of this component is to improve productivity by upgrading the skills of the present workforce. Beginning in the first six months of the project, employers who have contributed to the HREF through the corporate tax levy are eligible for these programs. HAS will develop the grant application forms and process with the HREF Council. Employers are eligible for multiple grants. In most cases, employers will have space, equipment and skills to provide the training in their own facilities. Some may need external resources to meet their training objectives. The HREF Council-appointed Selection Committee would review applications on a monthly basis and assure rapid turn around. Between 200 and 300 grants will be given over the loan period. Up to 6,000 employees/employed workers will receive training in this component. Employers will be encouraged to make use of existing skills testing and certification systems being administered by NAITA for the award of National Skills Certificates to those upgraded workers under the project. Technical assistance will be provided through HAS in proposal development and in assuring that all ADB requirements are met in financial management, procurement and delivery of the training.

v. Corporate Programs: HREF Training Partnerships 245. The objective of this component is to improve productivity through the supply of technicians in response to industry sector council initiatives in small sectors. Sectors of industry as represented by industrial sector associations may wish to take over part of an existing institution and offer programs that meet their specific needs. The HRIF makes a provision for public sector initiatives in this area but will concentrate on technologies of national development importance. Many industries may have technologies, which are not in this list but are important to the economy. Some sectors may be too small to develop a full partnership with an entire institution. Starting in the second year for the project, the mechanism to generate proposals will be a competitive bidding process among industry associations and a NATP member in response to an RFP from the HREF as prepared by HAS. One half of the grant amount would be regarded as an interest free loan repayable to the HREF within five years of the grant. These public-private partnerships will be used to train new higher-level technicians, upgrade those in the industry in new technology or enhance use of existing technology as well as possibly offer entry-level training. Non-NTA students will pay fees as set by the industry sector councils or institutional BOMs if such exist. A business plan that addresses inter alia loan repayment is required with the proposal. Grants will cover investments over four years with 50% of the program funds committed by the start of the third year of the loan. Eligible expenditures to be funded by grants/loans include: staff development, international standards and curriculum purchase, shop equipment, rehabilitation of existing facilities, technical assistance, adjustments to improve access for disabled students, promotional costs (advertising) and management

costs. Membership in and compliance with NATP standards is required. Ten grants/loans of up to a maximum of $300,000 will be given. Technical assistance will be provided through HAS in proposal preparation. Up to 3,300 new training places will be created by these programs, with half of them in part-time programs. A two-stage competitive process will be used which will be administered by HAS.

vi. HREF TEVT Provider Expansion and Quality Enhancement Programs

246. The intent of these programs is to increase the number of private TEVT providers and to expand the capacity and quality of existing private providers to respond to employer demands for higher-level technology programs in national growth fields. The mechanism will be a competitive bidding process among NATP private sector members in response to a RFP from the HREF. A HAS designed two-stage proposal review process will be put in place within the first four months of the loan. Fifty% of any grant will be in the form of a loan from the HREF to be repaid within five years. A business plan that addresses inter alia this repayable portion is required to accompany the proposal. Grants will cover investments over four years. Eligible expenditures to be funded by grants/loans include: staff development, shop equipment, rehabilitation of existing facilities, technical assistance, adjustments to improve access for disabled students, required facilities for women, promotional costs (advertising) and management costs. Membership in NATP and compliance with NATP standards is required. Up to 50 grant/loans with a maximum of $200,000 each will be awarded and the HREF Council will determine the regional distribution. Grant recipients meeting program accreditation standards may accept students who are recipients of NTAS. Registered institutions may accept fee-paying students. The intent is to create 2,500 new student places of which 1,500 would be for fee-paying students. A two stage competitive process as designed by HAS will be used. Technical assistance will be provided through HAS in proposal writing, business plan development and through NATP in quality assurance compliance. 247. Appendix 11 recaps the HREF proposed schemes related to the NTA scheme, in-industry training scheme, and private providers expansion and quality enhancement scheme.

2. The Human Resource Investment Fund (HRIF)

a. Component 2: Strengthen MTET to support a demand-driven, employer-responsive and public-private partnership based TEVT system

i. Performance Based Institutional Finance System

248. The objective of this component is to develop a performance based institutional financial system that links Government funding to achievement of key performance indicators related to institutional and program quality as judged by industry. Current institutional funding is by block grants that are unrelated to performance in student numbers or employment found for technician-graduates or satisfaction by the employers of the skills of technician-graduates. The new system for the colleges of technology would measure these outputs and reimburse them accordingly. Colleges of technology would be encouraged to meet NATP standards and thus become eligible to receive HREF NTAS students. The value of the NTA shall be considered as income and may be used for investment in the institution and for staff benefits. A one-day seminar for Government and Institutional financial officers will be hosted to validate system components and to provide training. Three months of international consulting will be required

and a handbook to train government and institutional managers in operating the approved system will be written by the consultant.

ii. Technician Standards 249. The objective of this component is to establish and maintain industry sector councils to validate international training standards in selected technician level programs and to validate the appropriate international curriculum. TVEC will work with industry sector councils to identify existing international benchmark standards in selected technologies or write new standards if no international standards are available. Once the standard is validated by industry, TEVT providers will be encouraged to meet the standards so that they can accept voucher students. The NATP would audit institutional compliance with program and institutional standards to assure TVEC of consistent and transparent compliance. The TEVT Quality Assurance Implementation Specialist provides technical assistance as part of his/her TORs.

iii. EMIS System 250. The objective of this component is to develop a basic Educational Management Information System (EMIS) to monitor system performance. Component 3 and the sub-components install more autonomy in the colleges of technology. To meet its obligations for system leadership and accountability in the use of Government funds, MTET requires an information system that provides ongoing data on the operation of each institution. In order to move towards a performance-based financing system, current and accurate information is required. A basic EMIS system would be installed in MTET in the first year of the loan to monitor system performance. Initially, staff would be trained in the Colleges of Technology and then in all NATP members to input data into the system. By the end of the project, the EMIS would have been interfaced with the MTET/TVEC MIS as initiated in the SDP and other on-line job referral systems like the JobsNet. Six months of national consulting assistance will be provided for this component.

iv. TEVT Quality Assurance 251. The objective of this component is to provide a TEVT quality assurance mechanism to ensure that industrial sector council validated program standards as endorsed by TVEC are achieved and maintained by all providers receiving HREF or HRIF award students or funding. Technical assistance will be provided. Established in the first six months of the loan through a national workshop for TEVT providers, the NATP will be voluntary, independent of Government and be self-funded by TEVT providers by the third year of the project. Expanding the number of TEVT providers will do little unless there is a rigorous quality assurance programs in place preferably based on ISO 9000 standards and free from political interference. TVEC will delegate to NATP the TVEC mandate for institutional registration and give NATP authority to manage the program accreditation compliance process for NVQ levels 5, 6, and 7. TVEC will establish program standards with industrial sector councils and pass these standards on to NATP for institutional program accreditation. TVEC will undertake sample compliance audits each year to assure itself of NATP’s effectiveness. In the first year of the loan, registration within NATP will be an eligibility requirement to access HREF funds or to receive NTAS students. By year three, registration as an association member and a certificate of compliance with quality standards for accredited programs will be required for eligibility to receive any HREF grants or loans or to be eligible to accept HREF NTAS students. Public institutions or those in public-private partnerships will be required to be members of the association to be eligible to accept HREF NTAS students or grants. By the third year of the loan, to be eligible to receive NTAS students,

all institutions will be required to be in compliance with the association quality assurance standards, which will include inclusiveness and pro-poor measures. The project supports 24 international consulting months for this component.

v. Overseeing of the Quality Assurance System 252. The objective of this component is to train TVEC staff as quality assessment auditors so that the Government sector can be part of selected NATP quality audit teams of TEVT providers. Once a quality program standard has been validated or developed with an industry sector council, the standard is transferred to the NATP. NATP will assist providers in meeting the standards and in writing a proposal to the HREF for support in eligible fields. NATP teams will audit institutions to ensure compliance with programs and institutional quality standards and TVEC will appoint a TVEC auditor to become a member of selected teams to reassure itself of system compliance and transparency. The TEVT Quality Assurance Implementation Specialist will train three TVEC auditors as well as 12 auditors to be available to NATP on contract as well as auditors from the private sector to be available to NATP for audits.

vi. The HREF and the Image of TEVT: Social Marketing and Career Guidance Programs

253. The objective of this component is to increase the quantity and quality of applicants for TEVT programs, in general, and the number of women and minority groups, in particular. Changing public awareness of technical education at the higher technology level is required to achieve this. Currently, many registrants in higher-level technology have completed all the requirements for University entrance but whose grades are below the cut off point. Higher-level technology is seen as a repository for unsuccessful GCE A-L graduates rather than as a career opportunity. The new colleges of technology and their offerings require social marketing to attract GCE A-L students with the right attitude and aptitude for technological education as a career. Funds will be made available through the HRIF for a professionally designed media campaign in cooperation with employers and to improve the quality of TEVT image building literature in the JobsNet system and in the 52 career centres established in SDP. Assistance will be provided to national sector associations in the growth industries to co-sponsor promotional campaigns. The HRIF Team Leader/Institutional and Strategic Management Specialist will work closely with QA Implementation Specialist to develop and carry out a social marketing plan and public awareness programs. 254. Public awareness programs on TEVT will be mounted in collaboration with selected career counselling and guidance centres. A school-based program from Grades 8 to 13 using CD/DVD to give career information on TEVT including positive images of technology, job opportunities and career path through the “laddering system” will be carried out. The programs will put emphasis on women, unemployed youth and economically disadvantaged groups. The campaign will also target less developed rural and urban areas to ensure that the poor are aware of the NTA scheme as a form of financial assistance. A competitive bidding process will be used to select a marketing/advertising company to design and manage the implementation of the media portion of the public awareness programs. HAS will manage the competitive bidding process.

b. Component 3: Strengthen the capacity of selected public sector TEVT institutions to become demand driven and partnership based COTs so as to respond to the needs of industry for technicians

255. The establishment of COTs through upgrading existing public TEVT institutions is premised on the need to expand and diversify the training system for higher-level technical skills development as pointed out by the labour market survey with the wide supply gap for technicians and skilled labour force. Post secondary education particularly for technology education is underdeveloped and existing facilities have limited capacity and capability to respond to present and future demand for technicians and skilled workers. Most of all, there is a sense of urgency on the part of the government to create alternative career paths for the youth in non-university and technological education as a more rational strategy of people development and improving productivity. Appendix 12 describes the vision of the COTs.

i. Institutional Governance 256. The objective of this component is to establish 10 autonomous COTs with a BOM in each to provide governance to these institutions. Technical assistance will be provided to draft the required legislation or amendment of existing Acts vesting in COTs’ governance such powers as financial autonomy, public-private partnerships, empowerment and accountability towards ensuring project sustainability. Other concerns would include producing implementing guidelines and manuals of business operations. 257. It is recommended that members of BOMs will be appointed by MTET from nominations provided by industry sector associations, chambers of commerce, professional associations and local employers. A representative of MTET will also be appointed. Boards will be responsible for selecting the CEO (from a shortlist approved by the minister) evaluating the performance of the CEO, approving a multi-year operating plan, approving the annual budget and receiving the annual auditor’s report. The elected chairman of each board will be from industry and will report to the Minister. The board will have the legal authority to sign contracts, establish revolving funds and to retain excess of revenues over expenses from year to year to allocate in support of the approved multi-year operating plan. A total of 36 international consulting months will be provided for this component including other components, namely: strategic planning, social marketing and public awareness raising and staff training.

ii. Strategic Planning 258. The objective of this component is to give each institution a strategic direction for growth in response to the needs of the region and the industrial sectors it is serving. Technical assistance will be provided for each of the proposed COTs to develop a strategic and operating plan outlining its assessment of the environment and market to which it provides technician education. The plan will include clear and measurable programs of development for staff, curriculum, equipment, facilities and finance. A financial framework will be part of this plan. A separate strategic marketing component of the plan will identify potential partner industries and strategies to build training partnerships with those industries. The plan will be approved by the BOM and then tabled with TVEC. The Team Leader/Institutional and Strategic Management Specialist provide assistance for this component as part of his/her TORs.

iii. Financial Planning and Financial Management 259. The objective of this component is to ensure that each institution has the capability to provide full financial planning and management services. Technical assistance will be provided to train the proposed COTs staff in financial planning and management including costing all elements of the strategic plan, developing an annual budget and supporting the development of the financial input in the marketing plan. Board governance under an approved annual budget will require detailed budgeting and accounting up to the level of preparing for audits. Managing the financial input into the EMIS system will be a major task as well as the management of contracts with the HREF and industry. Salary administration for non-government staff will be required. The project provides for 18 national consulting months for this component.

iv. Entrepreneurial Management 260. The objective of this component is to strengthen the capacity of the proposed COTs to meet industry training needs by selling the training services of the institution. As the institution becomes less dependent on government grants and more dependent on performance-based financing and generating revenues by selling its services in the open market, entrepreneurial leadership will be required. Technical assistance will be provided to train institutional leaders in managing a market-based institution, surveying industry and communities to identify needs, visiting employers to generate training, exploring sub-contracted production for training enhancement, writing proposals and bids, building private sector partnerships and bidding for HREF grants to develop training in new technologies. Competition for HREF NTAS students will also require a more market and client centred management style. The Project provides 12 national consulting months for this component.

v. Curriculum Innovation 261. The objective of this component is to strengthen the capacity of the proposed COTs to locate or create curriculum tied to the program standards set by the industry sector councils and endorsed by TVEC. Such curriculum will be audited for compliance with TVEC endorsed training standards, which in most cases will reflect international standards in technology. Technical assistance will be provided to identify existing benchmarked curriculum from the international technician training market or to assist private sector providers to develop curriculum to the endorsed standard, including the development and validation of technician aptitude test (TAT) to be used in student selection for admission and multi-media development and software acquisition for all platforms of training delivery. The project provides a total of eighteen national consulting months for this component including the part-time learning component. 262. The proposed technician education curriculum for higher-level technical skills development is an instrument for realizing pro-poor economic growth and poverty reduction. It will provide greater access and equity for the unemployed youth, school- leavers and other disadvantaged groups to post-secondary non-university technological education. It intends to gradually reverse a deep-rooted bias of the youth and their parents in favour of academically biased professions but which have no employment potentials. The realities of a globalized environment must be taken into full consideration. 263. The recommended structure of the proposed curriculum has duration of 2.5 years. The program will be on a semester basis and implemented through a modularized training system using different delivery platforms such as full-time, part-time and eventually on distance mode. A

three-month English Immersion course precedes the formal start of the Technician Program. The institution-based components will comprise workshop and laboratory work and related subjects such as Mathematics, Science and other foundation courses needed to develop a well-rounded individual for technician jobs. An industrial orientation component will be sandwiched after completion of the first year to acquaint the students with the world of work. After completion of the second year, a 6-month supervised industrial training will be required for the final award of the Industrial Technician Diploma. Figure 2 illustrates the proposed curriculum showing various options including entry and exit points and linkages.

Figure 2: The Proposed Technician Education Curriculum

264. The proposed technician education curriculum will be aimed at developing a versatile workforce capable of performing a broad range of jobs in industry and in a cluster of occupations. The competencies will include skills and abilities to interpret and execute engineering plans and lead skilled workers to perform the jobs with precision and quality results. Generic skills will be taken into consideration to ensure lifelong learning; employability and responsible citizenship towards building a competitive economy. These will include clusters of key generic skills such as (i) work readiness and work habits, (ii) interpersonal skills, (iii) enterprise, innovation and creativity skills, and (iv) learning, thinking and adaptability skills. Technicians usually perform such jobs as quality controllers/inspectors, laboratory assistants, maintenance technicians, quantity surveyors, assistant engineers, leadsmen/supervisors and other key positions at the operations level. This kind of workforce is quite suitable for a developing and export-oriented economy. 265. The proposed curriculum will be laddered allowing horizontal and vertical mobility of students including linkage to higher education. Admission will be mainly open to students with GCE A-L qualification who have the aptitude and motivation to pursue a technological career. However, those GCE O-L qualified youth and employed workers who have NCTs or equivalents, will be eligible for admission provided they meet other equivalency requirements to be set by TVEC. It will be an important requirement to administer a Technician Aptitude Test (TAT) to all qualified applicants for selective admission and passing the aptitude test will be one of the criteria in giving the merit-based national technology award. In this context the grades of

First Year: 2nd Sem: Institution-based Instruction 1st Sem: Institution-based Instruction

Second Year: 2nd Sem: Institution-based Instruction 1st Sem: Institution-based Instruction

Aptitude Test

Supervised Industrial Training (6 months)

Continuing Education Program(s)/ HigherEducation

Industrial Technician

Students with GCE A-L qualification (Grade 13, Age 18 yrs)

the competency oriented School Based assessment (SBA) component of the GCE A-L examination, effective from 2005, will also be useful.

vi. Equipment Upgrading 266. The objective of this component is to match the equipment in the proposed COTs with the curriculum to be used in technician training to meet the TVEC endorsed standards. Technical assistance will be provided to select equipment and have equipment of the generic type approved by industry sector councils to ensure that it will prepare technicians for employment. Assistance may be required in the emerging technologies where no industry sector is in place to assist with the identification and validation. The project provides for 12 months of national consulting assistance for this loan component.

vii. Facility Renovations 267. The objective of this component is to support minor facility renovations in the proposed COTs necessary to provide technician training as required by the endorsed standards, curriculum developed to meet those standards and equipment purchased to support the curriculum. Such renovations will be minor and may involve workshops, laboratories, offices, electrical power, water supply and lighting upgrading. National consulting assistance will be provided for twelve months to support the facility renovation process.

viii. Staff Training 268. The objective of this component is to upgrade teaching staff in the proposed COTs so that they can teach the approved curriculum in the context of any new equipment acquired or the new technologies offered. Often the staff are not familiar with industrial training practices and in order to be part of private sector training partnerships new skills will be needed. Many staff has no or very little industrial experience. Technical assistance will be provided to design and implement staff upgrading programs in existing and new technologies and to develop in-industry work experience for the staff. Staff training for industry based part-time teachers will be designed to increase the number of practitioners teaching part-time in the proposed COTs. Market-oriented institutions may require new staff skills in relating to students and to the community. Increasing the acceptance by institutions of women will be the key to improving the gender balance in the programs offered. The Team Leader/Institutional and Strategic Management Specialist will provide assistance for this component.

c. Part-time Learning 269. The objective of this component is to strengthen the capacity of the proposed COTs to design part-time credit and non-credit courses to meet the needs of the communities around them and the industries that they serve. Part-time courses will be an important part of revenue generation for the proposed COTs, hence, technical assistance will be provided to develop their capacity to respond to the adult community with appropriate teaching methodologies. Training partnerships with industry may involve the development of part-time certificate programs for existing employees and longer-term par-time programs for certification on an industry-wide basis including the development of training standards. Specific assistance in training needs analysis using Develop A Curriculum (DACUM) approach, scenario building, cross impact analysis and similar techniques as a form of assistance to industry and as part of revenue generation makes this an important component of beneficiary financing. The Technician

Curriculum and Part-time Learning Specialist will provide assistance for this component as given in his/her TORs. 270. Appendix 13 presents the project design summary showing the dual function of HAS in administering the implementation of the HREF and HRIF components and sub-components. D. Special Features of the Project

1. Use of incentives and not directives 271. The project uses incentives rather than directives to effect change in the TEVT process. To do this, the mechanism includes two parallel competitive bidding processes, one for private sector TEVT providers and industry and one for public sector TEVT providers in partnership with Industry.

2. Investment in private sector and in-industry training in growth areas 272. In the first process, the HREF, private providers will be asked to respond to an RFP that outlines the requirements for technician training in growth areas recommended by the TVEC. Proposals will be selected and loans and grants made available to enable winners to expand training in selected fields.

3. Investment in public-private partnership for demand-driven and industry-responsive training

273. The second competitive bidding process is for public sector advanced technical institutes and technical colleges in partnership with industry to propose how they would meet the industries' long-term technician training needs. Public sector institutions would receive technical assistance to meet industry demands and to prepare the bids; this assistance itself is in the nature of institutional strengthening and training in revenue generation for cost recovery. Between 6 and 12 partnerships would receive awards of between $1 million and $3 million to meet these needs. Award winning partnerships would be industry governed and revenue generating for sustainability.

4. Promotion of a National Technology Awards (NTA) scheme 274. Up to 10,000 full-time awards and 8,000 part-time and flexible time awards will be made on a merit basis to GCE A-L graduates and selected GCE O-L qualified graduates with NCT or equivalents who meet other prerequisites set by TVEC to follow a new 2 ½ year technician training programs (NVQ Levels 5 and 6). Each award will have a value to be determined by the HREF Council. Registered institutions with accredited programs from the above competitions would be eligible to receive these students and their awards.

5. Voluntary registration and accreditation system with active peer participation

275. A voluntary NATP would be formed. TVEC would delegate its mandate regarding institutional registration to this group. NATP would assist training providers to meet the standards and to train quality auditors.

6. Moving TVEC away from provision of training to setting standards and auditing performance

276. TVEC would receive assistance to establish industry sector councils, which would validate internationally benchmarked program standards, which after endorsement by TVEC, would be outsourced to NATP for compliance audits. Only institutions that comply with registration requirements and, after three years of compliance with program accreditation standards, would be eligible to receive HREF or HRIF assistance.

7. HREF/HRIF Administrative Services (HAS) 277. The HAS experience in ADB’s financial and procurement requirements will be provided as part of the Technical Assistance package. The project depends on the rapid implementation of both competitions as well as on their early disbursements to create an environment for change. The number of institutions and industries involved and the sheer volume of paper work will make financial arrangements and procurement quite complex. HAS will ensure that all ADB requirements are met during the first three years of the project and that competitive processes, financial management and procurement activities are quickly, efficiently and transparently managed without undue burden on the Government.

8. Social marketing and career guidance component 278. The project will have a social marketing and career guidance provision to improve the public’s perception of technicians and technology especially among the GCE A-L qualified youth, women and minority groups and in general to raise public awareness on TEVT through career and occupational information dissemination, career guidance clinics, educational fairs and exhibitions, use of the public media and the Internet. This multi-pronged campaign will be so designed as to reach the poor rural and urban communities in appropriate languages to promote technology education as a viable career path and the availability of the merit- based award programs with their stipend provisions to ensure that income levels do not become a barrier in accessing the awards.

9. Internationally benchmarked training standards 279. The project will make use of internationally accepted curriculum and training materials, which will be purchased and validated by industry sector councils. This will reduce the time on materials development, thus ensuring more cost-effective and up-to-date materials. Even updating of curriculum will be facilitated since these materials come from reputable international sources.

10. Distance mode of learning 280. The project supports the use of flexible platform of learning particularly for employed workers and employees. The present delivery systems in TEVT need to be upgraded in order to be more productive and cost-effective in terms of the volume of trainees and students served. Distance mode of training has been successful in apprenticeship and TEVT in a number of countries, i.e., India, Canada and Bangladesh with support from Commonwealth of Learning. In this regard COTs capability in multi-media development is to be expected in collaboration with local institutions of higher education such as Open University of Sri Lanka and University of Colombo School of Computing.

11. Eligibility for admission of GCE O-L qualified youth and employed workers with NCT

281. The project will provide opportunity for both GCE O-L qualified youth and employed workers who have satisfactorily completed and awarded NCT or its equivalent for admission to the Technician Diploma program upon meeting some equivalency requirements to be set by TVEC, i.e., recognition of prior learning, credit transfers, and bridging courses. Those who fulfil all entrance requirements will be eligible to receive NTA similar to any GCE A-L qualified entrants.

12. Laddering system and linkage with higher education 282. The project supports a laddered training system for horizontal and vertical progression and continuing education of technician graduates which will open options in the future to articulate the technician program with higher technology education through affiliation with the OUSL and UCSC, or link with a dedicated Technological University that may materialize in the future, as the apex of a national polytechnic/technological education system. E. Implementation Strategy

1. The Human Resource Endowment Fund (HREF)

a. Component 1: Making operational the Human Resource Endowment Fund as a springboard for changing TEVT into a public-private partnership-based, sustainable system.

283. A RFP for an international consulting firm will be initiated using the Asian Development Bank's selection process to choose a firm to set up and become responsible for the administrative support services of both the HREF and HRIF (HAS). The HAS would comprise one international consultant as Team Leader/HAS Coordinator for 36 months and three national consultants at 36 months each for a total of 108 person-months. The HAS team will require a fully equipped office space and two support staff. 284. The selected firm for the HAS would start work as early as possible in the loan so as to ensure that the HREF is immediately able to provide incentives for system reform. HREF staff other than the chief executive officer will be assigned as counterpart staff to the HAS team. The operational framework and terms of reference of HAS are given in Appendices 14 and 15, respectively.

2. The Human Resource Investment Fund (HRIF)

a. Component 2: Strengthen MTET to support a demand driven, employer responsive, public-private partnership based TEVT system.

285. To accelerate the movement of public TEVT institutions towards a demand-driven, industry responsive mode of operation, MTET through TVEC will develop a performance-based funding mechanism that will support equitable allocation of fund and revenue generation by TEVT institutions. One international consultant for 3 months will be required as part of the HRIF team to develop a performance based budgeting system.

286. Before purchasing training from public and private sector providers or assisting private sector providers to expand their training capacity in the high technology areas, Government and industry need to be reassured of the consistent quality of the training provided by these institutions and their compliance with acceptable and approved institutional and program standards. To achieve this, the project will provide one international consultant for 24 months to establish an independent and self-financed quality assurance (QA) system for TEVT institutions. The QA specialist will assist TVEC establish industry sector councils in 10 targeted growth areas as identified by the Government. It will host consultation meetings and seminars to achieve this end. It will then assists TVEC in sourcing internationally benchmarked technician program standards in the target technologies and bring these to the appropriate councils for validation. In addition to validation of standards, the industry sectoral councils are expected to provide an estimate of their manpower requirements to TVEC for planning and be accountable for the employment of qualified trainees. 287. The QA Implementation Specialist will host meetings of all interested private and public sector TEVT providers and outline the purpose of a National Association of TEVT Providers (NATP) and organize a working group to assist in planning the NATP. A general meeting of NATP will be hosted; an organizational framework and constitution presented for approval and a board elected. Institutional registration standards will be validated. The QA Specialist will work with TVEC to delegate the TVEC authority for TEVT institutional registration to the NATP. The QA specialist will develop the framework for assuring compliance with the program standards validated by the industry sectoral councils and endorsed by TVEC. Appendix 16 illustrates the resulting mechanism that will assist TVEC in validating TEVT standards and in overseeing the quality assurance system of TEVT that is done in close partnership with the private sector including the industrial sector councils and NATP. 288. The QA Implementation Specialist will train quality auditors for which the auditors will receive a stipend, to be hired on an as-needed basis by NATP for compliance audits. It will train TVEC staff as educational auditors simultaneously as auditors to be assigned as required, to NATP audits to assure consistent NATP standards. The QA Implementation Specialist will assist members reach compliance with NATP registration and program standards. The project will pay for 15 institutional audits in the first year of the program and 25 in its second year. One auditor and one industry technical expert and one peer from another TEVT institution will be paid for each for a period of 10 days per audit and be given travel and living allowance. This QA Implementation Specialist will further assist TVEC in designing a social marketing strategy and in selecting any professional assistance required for its implementation in close collaboration with the HRIF Team Leader. 289. Technical assistance will be provided in the form of a national consultant for 6 months in EMIS development to ensure MTET has adequate information for TEVT institutions to meet its mandate of overseeing TEVT operations. Equipment requirements will be provided for MTET, and HRIF award winning institutions with sufficient internet capacity and ISP funds. MTET, TVEC and COTs staff will be trained in EMIS and use of application software for database management.

b. Component 3: Strengthen the capacity of selected public sector TEVT institutions to become demand-driven and partnership-based Colleges of Technology to enable them to respond to the needs of industry for technicians.

290. A mechanism similar to that proposed for the HREF and sharing the HAS will be put in place for the HRIF. An international firm will be recruited to provide consulting services comprising one international consultant for 36 months as Team Leader/ Institutional and Strategic Management Specialist, one Quality Assurance Implementation Specialist for 24 international months; one TEVT Performance based Budgeting Specialist for 3 international months and seven national consultants for a total of 84 person-months both for Components 2 and 3 of the project. Operationally, the team of consultants will work with the PIU and will require a fully equipped office space and support staff. Once identified, the HRIF team leader would work immediately with the HAS team leader and HAS/HRIF Technical Services Specialist in developing work plans for Components 2 and 3.

3. Upfront TA for the Project 291. The project would require an upfront TA for about six months prior to the commencement of the loan for pre-project actions to assist in setting up of the PIU, training in preparing proposals for the selection process of 10 colleges of technology to be supported by the HRIF and reviewing the Stage 1 and 2 proposals. The TA would comprise a Proposal Development and Evaluation Expert for 6 international consulting months, a Finance and Cost Analyst for five national consulting months and a TEVT Planning and Management Expert for five national consulting months. 292. The TA will support all eligible TEVT institutions through regional/national seminars helping them identify an industrial sector partner and developing with the partner a proposal that not only includes the technologies or competencies to be taught but a strategic plan which includes a governance model, strategic planning framework, a financial plan and a financial management plan, a marketing plan and the requirements to become an entrepreneurial institution and will spell out the assistance required in curriculum, equipment, renovations, staff training, and the development of part-time, community-responsive learning institutions. 293. The participating TEVT Institutions will be given intensive technical support as they prepare their proposals and begin to master the skills required of an industry-oriented, demand-driven and community-responsive technician institute. A brief qualifying proposal will be submitted within 2 months of the 6-month period before the commencement of the loan. The technical assistance team to ensure that all criteria are addressed in the proposal would review the Stage 1 qualifying proposals. From the submissions, 20 partnership proposals would be selected for Stage 2 proposal development and would receive $2000 each to support the proposal development process. Such amount would be provided in the upfront TA. The 20 teams of institutional heads and industry sector partners would then be directed to proceed with the writing of the final proposals within a period of two months. The TA team would provide regional/national workshops to train Stage 2 partnerships further in the requirements of the RFP and in the requirements for compliance in financial management and procurement with ADB guidelines and procedures. These 20 proposals will be reviewed by the TA team for compliance with all aspects of the request for proposals. Those passing this threshold would be forwarded to the TVEC selection committee. The selection committee would then select the proposals that are most deserving of support and which represent a balance of locations and industry sectors. It would be recommended that three to four colleges of technology would be selected through

the same competitive process from those existing public technical colleges and advanced technical institutes in the North and East to address the backlogs and dearth of skills, which was constrained by the 20-year old conflict. An award of up to $3 million would be given to each of the 10 successful proposals. Appendix 17 summarizes the two-staged selection process for the colleges of technology through competitive basis to be supported by the HRIP. 294. Upon loan effectiveness, the HRIF consultants along with HAS would then continue to support the successful institutions in implementing the award as outlined in the accepted proposals and in achieving NATP registration and program compliance. Those institutions that were not successful in winning an award would also receive technical assistance to assist in implementing any aspects of their proposal that could proceed without any award funding such as availing of the strategic planning and entrepreneurial training. Meetings of the partnership award winners would be held every six months to review all progress and provide any support required on any ADB and project compliance issues. F. Project Cost and Financing Plan 295. The project is essentially financed by the HREF, a human resource fund to be established by the Government through corporate revenue and from an ADB loan. The entire cost of industry assistance will be met by the HREF. It will also provide loans and grants to private sector institutions offering technician programs to meet their investment costs in upgrading technology standards as expected by the industry. In addition, the fund will provide training costs of a selected number of students enrolled in both public and private sector institutions and a monthly stipend to a selected number of full time students in both public and private sector institutions following programs in technology education. The ADB loan will fund the cost of upgrading public sector institutions including purchase of modern equipment, renovations of buildings, staff training and institutional strengthening of MTET. About 68% of the cost of the project is expected to be financed from the HREF and the balance from the ADB loan.

1. Project Cost 296. The base cost of the project is estimated at $65.17 million (SLRs6,517.0 million) in 2003/2004 prices. With the inclusion of price contingencies and interest on ADB loan of $20 million, the total project cost increases to $73.65 million (SLRs7,364.9 million). Price contingencies have been estimated at 6% annual compound growth rate of the outstanding balance at the end of each year. The computation of price contingencies excludes the annual value of award since it is assumed to be fixed over the project implementation period. This estimate does not include physical contingencies. The share of foreign currency cost is estimated at 32% or $23.78 million (SLRs2,378.2 million) while the balance 68% or $49.87 million (SLRs4,986.7 million) is local currency cost. Table 20 presents the summary of the project cost.

Table 20: Summary of Project Cost ($000)

Cost Item Foreign Exchange

Local Currency Total % of Base

Cost A. Base Cost

1.Consultants – Remuneration International 1,500 1,500 2.3 Local 570 570 0.9 2. Civil Works 3,000 3,000 4.6 3. Equipment, Furniture and Vehicles 16,750 2,500 19,250 29.5 4. Industry assistance b 14,000 14,000 21.5 5. Training Support 21,750 21,750 33.4 6. Institutional Support 350 2,040 2,390 3.7 7. Staff Development 240 300 540 0.8 8. General Administration 750 1,420 2,170 3.3 Sub-total (A) 19,590 45,580 65,170

B. Contingencies 1. Inflation 2,796 4,287 7,083 Sub-total (B) 2,796 4,287 7,083

C. Interest Charges 1,396 1,396 Total (A+B+C) 23,782 49,867 73,649

Notes:

1. Equipment, etc. category includes assistance given to public sector COT. 2. Industry assistance includes HREF in-industry training, HREF employee training

and HREF training partnerships. 3. Training support includes assistance given to public and private sector providers

of technician education under the award scheme. It also includes stipend for 10,000 students at $200 per year for 2 ½ years.

4. Most of the expenditure items, accounting for abut 90% of the total project cost, are subject to 15% VAT. In this computation it is estimated that the VAT is already included in each item subject to VAT.

5. Interest charges are based on a 32 year repayment period with 8 years grace period. Interest rate during the grace period will be 1% and 1.5% during the remaining period.

6. Project cost has not been adjusted for physical contingencies. 7. Exchange rate is taken as SLRs100/$1.

297. About one third of the cost is accounted by the training support category, which includes training award and stipend. Public sector training institutions receive 29.5% of the base cost to purchase equipment and machinery and renovate buildings of those institutions selected to offer the proposed training program. Another 21.5% of the cost has been allocated for industry assistance. The HRIF component accounts for 75% or $48,814,000of the base cost, including training award and stipend. The balance 25% or $16,404,000is the estimate of the HREF allocation. Refer to Appendices18 and 19, respectively, for details of project base cost and cost by components.

2. Operation and Maintenance (O&M) 298. The project does not provide any direct financing for O&M with the exception of HAS administration and PIU. The allocations provided for these two categories are primarily to cover their O&M costs. Most other components have no direct O&M costs that need to be financed from the project. While the issue of poor staff salaries in public sector training institutions surfaced during the feasibility study of this project, the project does not consider that this issue needs consideration since the sustainability of any intervention by the project cannot be granted beyond the project implementation period. In the absence of a reliable source of funding beyond the project implementation phase, any recommendation to increase salaries of teaching staff of these institutions could adversely affect the project. 299. However, a part of the training award given to students can be utilized for this purpose with the approval of the PIU. Another source for additional compensation to teaching staff could come from income generating activities promoted by the project.

3. Financing Plan 300. An ADB loan of $20 million is expected to finance about 27.2% of the total project cost. The entire Bank loan will go towards financing about 84% of the total foreign exchange cost of $23.782 million. The Government will provide a local counterpart of $50 million from its HREF and it will be used to finance local costs of HREF and HRIF components including NTAS for students, renovations, equipment, furniture and operation and maintenance of the PIU. It will also support foreign exchange cost of interest payment on the Bank loan and operation and maintenance of HAS administration. Refer to Table 21 for details of the financing plan.

Table 21: Proposed Financing Plan of the Project ($000)

Source Foreign Exchange

Local Currency Total %

Bank 20,000 0 20,000 27.2 Government 1,396 48,604 50,000 67.9 Other 2,386 1,263 3,649 4.9 Total 23,782 49,867 73,649 100 301. These two sources provide funds to finance only 95% of the total cost. The balance 5% or $3,649 million, consisting of local currency $1,263 million and foreign exchange $2,386 million, requires financing from a supplementary source, which needs to be identified at the time of negotiation. 302. It is also possible to finance this amount from the recovery of loans given to the industry and to the TEVT providers totalling $4.5 million. The loans are expected to be fully paid within the project implementation period. Appendix 20 provides the details of the financing arrangement.

4. Overall Project Financial and Economic Sustainability 303. While financial sustainability of the project remains fairly strong, there are still some uncertainties. Although 95% of the project has potential financing sources, almost 70% of the funding comes from the HREF, established by the Government in its budget proposals for 2003. Without the support of this fund the project cannot be financed or sustained even in the short

term. The uncertainty of the availability of funds from this source arises since it is managed by the Treasury. The past experience suggests that when the government is experiencing revenue shortfalls in relation to government expenditures, the Treasury imposes budgetary ceilings on public spending and delays disbursement of funds. If the Government allocation for this project is also subject to such cut backs, the implementation of the project will face serious problems and consequences. The HREF not only finances the industry assistance, but also the HRIF training award, stipend and other expenditures. Any shortfall of the HREF to the project could totally disrupt the project. Another issue is that due to the dissolution of the Parliament, the HREF Act has not been approved by the Parliament. Submission delays of the Act to the parliament could also delay the commencement of the project implementation which is currently planned for mid 2005. 304. It is therefore recommended that the Bank obtains assurances of the approval of the Act before the commencement of the project as well as the continuity of funds from the HREF during at least the implementation period in accordance with the funding requirements from this source. 305. The long term sustainability of the fund also remains highly uncertain. The bank funds are limited only to the project implementation phase of five years. The continuity of HREF beyond the initial five years is, however, needed to derive anticipated long term benefits from the project. The economic analysis also assumes the availability of HREF to continue with training award and stipend as well as to provide industry assistance. If this fund is not available, all these activities will have to be discontinued and as a consequence the project will become another training program similar to what is available at present. The industrial sector too would not receive assistance from the project to upgrade technology or skills of employees. 306. It is recommended that the Bank undertakes a review of the project in the third or fourth year of the project with particular focus on its impact on the economy, employment, foreign exchange earnings and demand for and marketability of graduates in the domestic and international labour markets. Based on the findings, the long term sustainability of the project should be taken up with the government to ensure availability of HREF to meet financing requirements beyond the project implementation phase. G. Implementation arrangements

1. Project Management 307. The MTET through the Project Implementing Unit (PIU) in collaboration with the HREF Council will serve as the main executing agencies for the Project. A combined HAS will be outsourced to an international consulting firm to administer the HREF and HRIF components in accordance with agreed Project implementation arrangements, which will be worked out during loan appraisal. The Team Leader/HAS Coordinator will be responsible to the CEO of the HREF Council for HREF implementation pertaining to National Technology Awards Scheme, Corporate Program and TEVT Providers Program and to the PIU for HRIP implementation pertaining to awards of grants to winning partnership proposals on improving the technician education system. The HAS and PIU will be supported by international and national technical assistance. The Secretary of MTET will be the chief accounting officer of the project. 308. A Project Steering Committee (PSC) will be organized, chaired by the Secretary, Ministry of Policy Development and Implementation, with other members such as the Secretary of MTET, CEO of HREF Council, Director General of TVEC, Director General of SLIATE, Director

General of DTET, Project Director of PIU (as recording secretary), and other representatives from the private sector. The Steering Committee will serve as the apex decision-making body and will meet quarterly to review progress of the Project and to make decisions. The project implementation management system is given in Appendix 21.

2. Implementation Period 309. The project implementation period will be five years from June 2005 to May 2010. The implementation schedule for activities as drawn from the project components is shown in Appendix 22.

3. Procurement Arrangements 310. The project has two major components, namely: HREF and HRIF. The procurement of goods and services will be the responsibility of the HREF/HRIF Administrative Services (HAS) in close coordination with the HREF Council for the HREF components and the PIU for the HRIF components. Procurement procedures through grants will be developed during appraisal and will be agreed during the loan negotiation with the Bank. All Bank-financed procurement for the project will be in accordance with Bank’s Guidelines for Procurement. Each contract for goods and services of more than $500,000 will be awarded on the basis of international competitive bidding procedures while contract packages of the equivalent of $500,000 or less will follow international shopping procedures. Minor items valued at less than $50,000 equivalent will be procured on a direct purchase basis following Government procurement procedures. Appendix 23 includes the procurement packages and modes of procurement.

a. Staff Training and Development 311. The project will provide training and skills upgrading of existing and new staff of selected COTs, TVEC quality auditors and selected NATP members. As per estimate, there would be a need for training of about 440 persons or a total of 60 person-months of international training in new and emerging technologies and about 250 person-months of local training and workshops in such areas as skills upgrading in the selected technologies, performance-based budgeting, strategic planning, accreditation, quality assurance, entrepreneurial management, institutional governance and open learning systems. A summary of indicative areas for staff training and development, which will serve as a guide for the RFP, is given in Table 22.

Table 22: Indicative List of International and Local Fellowships Programs

Field of Training/Specialization No. of Persons

International p/m

Local p/m

Total p/m

1. Skills upgrading of teaching personnel 210 210 210 2. Upgrading in new and emerging

technologies

20

60 60

3. Performance-based budgeting 10 5 5 4. Strategic Planning 30 10 10 5. Accreditation 50 8 8 6. Quality Assurance (assessors) 50 8 8 7. Entrepreneurial Management 10 2 2 8. Governance and administration 50 4 4 9. Open/part-time learning system 10 3 3 Total 440 60 250 310

312. The PIU will be responsible for implementing the international fellowship and local training programs in close coordination with the HAS. In most cases, the local training programs and the workshops will be conducted in collaboration with the team of consultants as defined in the TA TORs. 313. The staff training will be a major part of the RFP from the proponents and therefore included as part of the block grant awarded to winners for the partnership- based COTs. Winning proponents will carry out staff training according to approved proposals and the guidelines set by ADB. Therefore, the indicative list may differ from the specific needs and cost estimates as proposed by the winning proponents. However, the total cost should be within the limit of the loan provision for staff training and development.

b. Consulting Services 314. The project will provide four international consultants for 99 person-months and 10 national consultants for 192 person-months, or a total of 14 consultants for 291 person-months. The consulting services will be deployed, as needed, based on the project implementation strategy and schedule. An International consulting firm with the support of a local partner will be engaged to carry out the HREF and HRIP components as described in the implementation strategy and HAS terms of reference. The selection of the consulting services will be in accordance with the Bank’s Guidelines on the Use of Consultants. The summary of the consulting services and the suggested process-oriented terms of reference of individual consultants are provided in Appendices 24 and 25, respectively.

c. Civil Works 315. Civil works under the project will be mainly for renovation and repair of buildings for workshops, laboratories, offices and common areas. Local contractors may be engaged through competitive local bidding in accordance with procedures acceptable to the Bank. 316. Civil works including cost of renovation and repair of buildings should be included in the RFP, which are expected to differ from one proponent to the other. Therefore, this will be evaluated and included in the block grant awarded to the winning proponents. Undertaking of renovation and repair will become the internal responsibility of the winning proponent subject to compliance with accounting and auditing procedures acceptable to the Bank. The preliminary estimate for the renovation and repair of building facilities of the proposed colleges of technology amounts to $3 million, which is set aside as a grant for this purpose.

d. Equipment, Service Vehicles, Furniture and Curriculum Materials and Training Standards

317. The procurement of goods for HRIF will be implemented by PIU in close collaboration with HAS and in accordance with the Bank’s Guidelines on Procurement. Procurement is part of the RFP for the selection of COTs. The procurement is set from $1 million to $2 million for each proposal, which will be evaluated and approved as part of a block grant. A total of $14 million is allocated for equipment upgrading and benchmarking of COTs. Consultants will assist in the process of listing, validating, packaging and tendering of equipment including procurement of curriculum materials and training standards from other countries.

4. Advance Action 318. The Government may take advance action, which may not result in Bank-financed expenditures prior to loan affectivity. These may include the (i) establishment of the PIU if the existing one for the on-going SDP will not be maintained; (ii) establishment and management of the HAS by an international consulting cum financial firm; (iii) baseline data survey on emerging and new technologies for developing policy guidelines in connection with the RFP for Stages 1 and 2 of the selection process for partnership-based COT; (iv) proceed with the selection of the colleges of technology in partnership with a cluster of industry sectors or sub-sectors; and (v) formulation of policy guidelines and institutional arrangements on the financial management of the project in terms of use of loan proceeds, disbursement arrangements, accounting and auditing of project funds and financial reporting formats and mechanisms for HREF and HRIF which may be agreed upon during the loan appraisal period. 319. In connection with the pre-project actions, it is highly recommended that an upfront TA be considered to assist the Government in undertaking them. This TA can be mounted 6 months prior to loan commencement. The terms of reference of the TA can be discussed and agreed during the loan appraisal.

5. Disbursement Arrangements 320. The Project funds will be deposited with the Central Bank of Sri Lanka in two separate special dollar accounts (SDA), one for the HREF and the other for the HRIF with authorized allocations equivalent to four to six months of estimated expenditures. The project will adopt a transaction-based disbursement system. The SDA will be operated and managed by the joint HREF-HRIP Administrative Services (HAS), an international consulting/financial firm, under the responsibility of the CEO of the HREF Council and Secretary of MTET through the PIU, respectively. The Government will provide an advance to the HAS to cover the Government’s and ADB’s share of project cost as is the normal practice for all donor-funded projects in Sri Lanka. Thereafter, the HAS will make payments from the Government-advanced funds and reimburse ADB’s share of the project expenses from the funds in the SDA, accordingly. The HAS will consolidate the disbursement report and submit withdrawal applications to ADB for replenishment of the SDA.

6. Accounting, Auditing, and Reporting 321. The Project may follow the cash basis system of accounting. However, additional books and reporting formats will be required to account for component-specific expenditures. This will be discussed during the loan appraisal period. It is recommended that the Auditor General of Sri Lanka will audit project accounts, as done in other loan projects. The format of financial reports will be developed during the loan appraisal period, including monitoring and reporting to ADB on a quarterly basis and will be agreed during loan negotiation.

7. Project Performance Monitoring and Evaluation 322. Project monitoring and evaluation will be the joint responsibility of the MTET through the PIU and the HREF Council in close collaboration with HAS. It will involve the monitoring and evaluation of both the HREF and HRIF components to be carried out in three stages during the 5-year project cycle. For the first stage, which is the initial year of implementation, a baseline indicator study will be conducted to establish sets of objectively measurable and verifiable targets encapsulating the anticipated project benefits. For the second stage, covering the

second and third years of the project implementation, a monitoring study will be carried out to evaluate the project progress. The third stage, which is the fourth and fifth years of implementation, will evaluate the overall performance of the project in achieving its stated objectives and benefits. The project performance indicators are given in Appendix 26.

8. Project Review 323. Besides periodic reviews of the project by ADB, the Government and ADB at the start of the third year of implementation will jointly carry out a mid-term review. Among other things, the mid-term review will: (i) evaluate the project scope, design, implementation arrangements, institutional development and capacity building processes; (ii) review changes in Government policies and institutional framework since appraisal and evaluate their impact on the project; (iii) assess project implementation against performance indicators; (iv) review compliance with loan covenants; (v) identify critical issues and constraints, if any; and (vi) recommend changes in the design or implementation of the project, as needed. Particular attention will be given to reviewing the performance of the HAS both in the HREF and HRIF implementation for appropriate action by the Government and ADB, accordingly.

III. TECHNICAL ASSISTANCE 324. The project will require an upfront TA for carrying out pre-project activities which are essential to be in place prior to loan effectiveness. The activities will include the following: (i) establishment of the PIU; (ii) selection of the 10 colleges of technology on competitive basis for the partnership award; (iii) building capacity of Stage 1 and 2 participating institutions in the partnership award program particularly in proposal preparation and development, (iv) developing the partnership award scheme and selection system including criteria and forms related to the selection of colleges of technology in close consultation with MTET and TVEC; (v) assisting in the evaluation of partnership proposals; (vi) assisting in the prequalification of the HAS and the HRIF Consulting Services; and (vii) detailing systems and procedures related to procurement; withdrawal, disbursement, accounting and auditing of fund and format of financial reporting to ADB and Government as approved during loan negotiation. 325. The TA will require one international consultant on proposal development and evaluation for 6 person-months, one national consultant on financing and costing of proposals for 5 person-months and one national consultant on TEVT planning and management for 5 person-months, or a total of 16 person-months. The consultants will be selected by ADB according to the Guidelines on the Use of Consultants to be deployed six months prior to commencement of the loan project. 326. The TA grant will include salaries, per diem, airfare, and operating and miscellaneous expenses for six months including provision of financial support for proposal development of $2,000 each for 20 partnership proposals at Stage 2 of the selection process. The former office and ADB-donated equipment used by the team of consultants in TA No.4090-SRI (Human Resource Investment Project) would be utilized to cut down the cost. The cost estimate of the upfront TA would be about $350,000.

IV. PROJECT BENEFITS, IMPACTS AND RISKS A. Project Benefits and Impacts

1. General 327. The economic justification of the proposed project presented below is based on a mixed approach to assess its direct and indirect benefits to project beneficiaries as well as the economy as a whole. This approach has been adopted due to serious limitations of the conventional cost benefit analysis in estimating monetary benefits that arise from this investment and the magnitude of such benefits. This problem applies generally to both the components, HREF and HRIF, but the HREF component has much greater limitation than the HRIF component. Accordingly, the EIRR methodology has been applied to the benefits of the HRIF component while economic benefits of HREF have been analyzed on the basis of its contribution to the national economy. Although they are considered as two separate components they are highly integrated particularly in terms of financing of the project.

2. Economic Benefits of HREF 328. The HREF component has been designed to assist financially industries contributing to the HREF to improve product quality, acquire new technology and develop the skills of the labour force.16 At present, approximately 1,000 firms are contributing to this fund. The fund currently stands around $20 million, and its contribution to the project is considered as $50 million. 329. The Industry assistance under HREF is provided through grants and loans and they are intended to assist the industry to (i) adopt modern industrial technologies, (ii) establish partnerships with training institutions to offer training in specialized technological fields, and (iii) upgrade skills of employees of selected industries. The project provides $14 million direct financial assistance to industry consisting of grants $12 million and loans $2 million. 330. Training in advanced technical education is one of the priority areas in the Government’s medium term economic policy as described in Regaining Sri Lanka. It has assumed priority in response to the increasing significance of the role of the private sector in promoting sustainable economic growth through the expansion of key economic sectors of which manufacturing is particularly important. Lack of skilled labour force with training in modern technology in production, maintenance and operation has been a major constraint faced by the private sector which is mainly attributed to supply driven traditional training programs offered by public sector training institutions. Such programs failed to provide skilled labour required by the expanding manufacturing sector. 331. Two main economic benefits are expected from the project. An increase in productivity as labour force becomes more skilled and productive and it will assist the industry to strengthen both domestic and international competitiveness. Approximately 10,000 employees are expected to directly benefit from industry training during the implementation period. In addition 16 The Government in its budget for the fiscal year 2003 reduced the corporate tax from 35% to 30%, but introduced a levy of 2 ½% for human resource development. All firms paying corporate tax at 30% will be required to contribute 2 ½% to this fund. The fund will be used to provide tertiary and vocational training to students and youth qualified to receive such training and for upgrading of skills such as IT of corporate employees. It also provides funds to the private sector to acquire new technology and purchase modern equipment and machinery.

another 150,000 employees are expected to indirectly benefit from the improvement of technology in industry through training in the application of these techniques in the production process. 332. The increase in domestic competition could increase the industry’s market share and reduce the volume of imports in related industrial products. It could also lead to higher profitability of production through economies of scale and new employment opportunities through indirect and spread effects. The higher international competition increases market penetration, which could in turn lead to an increase in export volume, foreign exchange earnings and profitability. 333. Economic benefits related to productivity cannot, however, be estimated due to the non availability of data on production costs, unit cost of production and potential increase in productivity of the industries who will qualify for financial assistance. It is also not clear how the increase in productivity benefits employees or employers of these organizations. Furthermore, productivity related wage increases are difficult to separate from the wage increases that are based on labour regulations or administrative decisions. A comprehensive survey of selected industries is needed to at least develop a methodology to estimate productivity related benefits and to assess the level of capacity utilization in industry. Such a survey was, however, not part of this technical assistance. 334. Apart from productivity related benefits, the investment proposed under HREF also leads to an increase in industrial output, industrial employment and a change in export and import composition of industrial products. The economic analysis of the HREF, therefore, focuses on the macroeconomic impact of potential increase in industrial output.

a. Macroeconomic Impact of the Project 335. In the fiscal year 2002, there were 3,110 firms paying tax at the rate of 35% and they contributed Rs11,749 million in that year to revenue of the Government. These firms represent all sectors of the economy, including manufacturing, trade, services and construction. Although it is difficult to exactly determine the number of manufacturing firms that fall in this category, the industrial classification of manufacturing firms shown in Table 23 provides a basis for a very rough estimate of the firms in this category. 336. The establishments shown in the table have more than 25 employees per establishment. A total of 2,035 establishments were reported in this category, which includes both medium and large-scale establishments. A further breakdown of this total by the size of the establishment in terms of the work force shows that 571 establishments employed between 25 and 39 employees, 799 between 40 and 99 employees, 481 between 100 and 499, and 184 above 500. A large number of establishments in the last category were Textile, Wearing, Apparel and Leather and they accounted for 117 out of 184 establishments. This category also included 14 Food & Beverages establishments, 7 Paper, Printing and Publishing, 14 Chemicals, Rubber and Plastic, 13 Non-Metallic, 11 Metal, Machinery and Equipment and 8 other manufacturing. 337. Apart from those firms that enjoy tax holidays, most others qualify for assistance under the HREF component. However, during the 5-year period only about 380 firms will be provided with loans or/and grants, giving a share of 18.6% of total establishment of 2,035 reported in the table. Although all firms contributing to HREF are eligible to receive assistance under this project, it is, however, expected that large-scale industrial establishments will receive priority. Assuming value added is proportionately distributed across all industries, the contribution of these 380 firms to value added would have been around $349 million in 2002.

Table 23: Distribution of Manufacturing Establishments by Major Industrial Classification

Industry Category No. of Establishments

No. of Employees

Value Added in

1999 ($million)

Value Added in 2002

($million) Food, Beverages & Tobacco 604 57,145 733.2 721.7 Textile, Wearing Apparel & Leather 678 191,402 530.3 522.0 Wood, Wood Products & Furniture 71 7,094 8.3 8.1 Paper Products, Printing & Publishing 65 13,690 36.6 36.0 Chemicals, Petroleum, Rubber & Plastic 301 37,581 280.6 276.2

Non-metallic Mineral Products 131 14,612 82.1 80.8 Basic Metal Industries 13 1,345 5.6 5.5 Metal Products, Machinery & Equipment 129 26,214 191.4 188.4

Other Manufacturing Industries 43 12,852 31.8 31.3 Total 2,035 361,935 1,899.7 1,869.9

Source: Department of Census and Statistics, Annual Survey of Industries, 2000 and Central Bank Annual Report 2002. 338. A further assumption is needed to assess the potential benefits from the HREF investment on these firms. As the prime objective of this investment is to increase manufacturing production and improve productivity, it is reasonable to assume that the investment will lead to an increase in production as well as value added by some percentage per annum of those firms that will receive industry assistance under the project. 339. The economic analysis is based on the assumption that the HREF investment will lead to an increase in value addition by 1.5% per annum by the fourth year and will continue to maintain this increase over the next 10 to 15 years. In the first year 25% of this increase will occur, in the second year 50% and the third year 75%. This increase in value addition is expected from the increase in labour productivity as well as from the acquisition of modern technology that will modernize the production process. The latter will lead to an increase in production as well. It is estimated that a 1.5% growth in value added of these industries could contribute to about 1.6% to the increase in GDP.17 340. The estimated contribution to GDP under the 1.5% growth assumption appears relatively small if the GDP is expected to grow at a higher rate of from 6% to 8% in the medium term. Given the declining importance in the agricultural sector, manufacturing will have to play a leading role and therefore the growth rate in manufacturing of the 380 establishments could be much higher than 1.5%. A higher growth of value addition by these industries would increase economic benefits of the HREF as well. Using this increase in value addition, a number of measures have been computed and reported in Table 24. Computation details of the economic benefits of HREF and HRIF including assumptions are given in Appendix 27.

17 In 2002, the manufacturing sector as a whole grew by 2.2% and this low growth rate reflected the recovery of the economy from a negative growth of 1.5% in 2001. With 2.2% growth in the entire manufacturing sector, its contribution to the increase in GDP in 2002 was about 9.4%. The expected increase of 1.6% is based on the share of 18.6% of the selected industries in the total composition of manufacturing firms.

Table 24: Estimation of Economic Benefits of HREF Component

1.5% Annual Increase in Value Added Description 15 Year Benefits

Calculation 10 Year Benefits

Calculation PV of Cost ($000) 12,876 12,876 PV of Benefits ($000) 23,053 15,369 B/C Ratio 1.64 1.19 FIRR (%) 41% 20% Employment Benefit 4,462 2,975 20% increase in Productivity 3,718 2,478 Note:

1. PV = Present Value; B/C Ratio = Benefit Cost Ratio; FIRR = Financial Internal Rate of Return.

2. Employment impact is based on Output/Employment coefficient which stood at $5,166 per employee. The number shown under employment is the cumulative total at the end of the 10th year.

341. As demonstrated the B/C ratio at 1.5% increase in Value addition varies from 1.19 to 1.64 under the two scenarios based on 15 and 10-year time interval of assessment. The FIRR under the two scenarios varies from 20% to 41%. As these estimates indicate, the HREF investment brings very high return to the manufacturing firms receiving assistance under the project. As indicated earlier, a part of the increase in value addition is due to increase in productivity and the other part is to increase in production. 342. The employment impact shown in the table is the number of new job opportunities that result from increased production. Applying the 2002 output/employment coefficient has derived this estimate and it gives 2,975 and 4,462 new job opportunities under two scenarios at the end of ten and 15 years. However, under the assumption of 20% increase in productivity, these opportunities would be marginally lower. 343. The increase in output can be consumed locally either as a consumer good or investment good or export to international markets. In 2002, the total value of manufacturing imports reached $2,092.5 million and exports $766.4 million18. These figures include both imports and exports of the firms that would benefit from HREF investment. If increased output is consumed locally, the government will lose revenue from import duties, but this reduction is likely to be set off due to increased revenue from Valued Added Tax (VAT). If the increased output is exported, the country will benefit from higher foreign exchange earnings.

3. Economic Benefits of HRIF 344. The other focus of this project is to introduce training in modern technology to school leavers after GCE A-L. Currently, vocational training and training in technology are provided by the public sector institutions. One of the key objectives of this project is to promote private sector in the provision of modern technology. An allocation of $5 million has been made under this project to private sector providers to improve facilities in technology education and 50% of this allocation is considered as a grant and the balanced 50% a loan.

18 Annual Report of Exports and Imports 2002, Sri Lanka Customs.

345. In the public sector, the project recommends the selection of 10 institutions and a procedure has been developed and presented in the report to assist this selection. The project allocates $14 million to help these institutions purchase equipment, machinery and new technology to offer demand driven training programs to school leavers. These institutions are also provided with a total of $3 million for building renovation and each institution can claim up to a maximum of $300,000 for this purpose. In addition, the project also supports staff development, financial management, strategic planning, curricula development and consultancy services. 346. A training award scheme and a living allowance for students are two other features of the HRIF component. The training award scheme provides $8 million to private sector institutions over the period of project implementation. This represents the allocation of $1,000 per student per year for two years for a total of 4,000 students. In the public sector, each student will receive $600 per year for two years for a total of 6,000 qualifying students. Approximately 100 students in each institution are expected to receive this award. In addition part time and flexi time students will also receive a lump sum at $400 per part time student and $200 per flexi time student. A total of $10 million has been allocated to the public sector under the training award. All full time students in public and private institutions receiving the award are also entitled to a living allowance or stipend amounting to $240 per year for 2 ½ years to cover the 2 year training period and the 6 months of industry training. The total cost of this has been estimated at $3,750 million. 347. The strengthening of management and administration of the MTET is part of the HRIF and it has been allocated $2,426 million. This allocation provides funds to the Ministry to improve its financial management and technician standards and develop and manage QA Schemes, support institutional strengthening and promote social marketing of technician education.

a. Economic Internal Rate of Return (EIRR) Methodology 348. As the investment on HRIF is directly on training in technical education on demand driven programs, it is possible to apply the CBA approach. Economic benefits from the investment on HRIF occur through improved employment opportunities and higher earning potential from demand driven training in technician education. Some of these graduates will also seek employment opportunities in global employment markets at much higher wages than that offered by the local industry. Although overseas employment is a useful source of foreign exchange earnings and, therefore, it is an important aspect of the HRIF, the emphasis, however, is on the contribution of HRIF towards the strengthening of the local manufacturing sector 349. EIRR methodology is based on a number of assumptions. It is expected that most of the graduates with a technician diploma will receive immediate employment mostly in the private sector. As there is an increasing overseas demand for graduates with technician education, it is estimated that about 10% of these graduates will find employment outside Sri Lanka. A key assumption used in estimating economic benefits of employment is that about 90% of graduates will be employed at the end of the fourth year or 1 1/2 years after completing the diploma program. 350. In estimating incremental benefits a comparison will be made between those who have a diploma in modern technology offered under this project with those working as technicians without such formal training. According to information available from the industry sources,

diploma holders can expect about 50% increase in wages after a year of employment in industry. Using this approach, the incremental benefits have been calculated annually and included in the EIRR computation. Refer to Appendix 27 for the assumptions used in the computation of EIRR of the HRIF component. 351. Table 25 presents the results of the EIRR tests, including the sensitivity tests. It gives EIRRs for three periods. The 20-year period EIRR computation assumes the continuity of training award and stipend. It also assumes $10 million investment on machinery and equipment and $4 million on technology improvement by public and private sector institutions and building renovations at the end of the tenth year. At the end of the 15th and the 20th year, Equipment and machinery has been reduced to $5 million, and investment to $2 million. The 15-year period EIRR also assumes similar allocations up to the end of the 15th year. The 10-year EIRR has no investment allocation on machinery and equipment or building renovation beyond the project implementation phase.

Table 25: EIRR on HRIF Investment 20 Year EIRR 15 Year EIRR 10 Year EIRR EIRR Tests EIRR NPV EIRR NPV EIRR NPV

Base Case 17.9% 27,414 13.1% 3,210 -5.8% -22,042 Cost up by 10% 16.3% 20,778 11.0% -3,079 Benefits down by 10% 16.1% 18,036 10.8% -3,400 Combination of 2 & 3 14.5% 11,400 8.6% -9,691 Cost up by 20% 14.8% 14,141 Benefits down by 20% 14.1% 8,659 Combination of 5 & 6 11.0% -4,634 352. As demonstrated in the table, the 20 year EIRR test gives return of 17.9% for the base case and NPV of $27.4 million at 12% discount rate. The EIRR drops to 11.0% when the cost is increased by 20% and benefits are reduced by 20%. At this level, the NPV falls to $-4.6 million indicating that at 12% the investment results in a loss of $4.6 million. 353. When the period of evaluation is reduced to 15 years, the EIRR also drops significantly. The base case of 13.1% is still quite acceptable as it is more than 1 percentage above the social discount rate of 12%. However, the combination of cost up by 10% and benefits lower by 10% reduces the EIRR to 8.6%, which is below the acceptable level. The NPV at 12% also declines from $3.2 to $-9.6 million respectively. 354. The economic viability of the project declines sharply when the period of evaluation is taken as 10 years. Even the base EIRR turns out to be negative, indicating that this investment should not be pursued. However, the period considered under this alternative limits the full assessment of benefits from the investment, which takes a long-term perspective given that newly acquired skills will continue to contribute to the growth of the manufacturing sector. Furthermore, the computation of benefits is based on very conservative estimates and therefore more realistic assessment would improve the viability of the HRIF component.

4. Economic Analysis of the Overall Project 355. Despite the limitations of using EIRR methodology in HREF component, an attempt has been made to calculate EIRRs by combining cost and benefits of the two components. Table 26 presents the values under two scenarios. Again a high EIRR is observed in the base case for

the 15-year period, which gives 22.2% return and a NPV of $37.4 million at 12% discount rate. Even the worst EIRR under this scenario is impressive. The EIRR of the 10-year period also demonstrates a sharp decline, but it is still above the socially acceptable rate of 12%. Even the sensitivity tests are reasonably good as they are within 2 percentage points of the 12% discount rate.

Table 26: EIRRs of the Combined Components 15 Year Period 10 Year Period EIRR Tests EIRR NPV EIRR NPV

Base Case 22.2% 37,402 13.6% 3,208 Cost up by 10% 20.1% 31,618 11.0% -2,125 Benefits down by 10% 19.8% 27,878 10.8% -2,446 Combination of 2 & 3 17.8% 22,093 10.1% -3,731 Cost up by 20% 18.2% 25,834 Benefits down by 20% 17.3% 18,353 Combination of 5 & 6 13.7% 6,784

356. The overall analysis of the economic feasibility of the project demonstrates that the project is economically viable as it could lead to an improvement in the industrial composition and production. Moreover, since the project targets the domestic industry, which has not received much assistance from the government under economic liberalization, a significant contribution to the domestic economy could be anticipated particularly through the supply of industrial inputs from local suppliers which will in turn lead to substantial indirect benefits and spread effects. If these factors were taken into consideration, the overall economic impact would be much more than that has been reflected in the EIRR calculations of this analysis.

5. Institutional Benefits 357. The project will result in the upgrading of selected TEVT institutions to colleges of technology and the strengthening of a number of institutions: (i) HREF; (ii) public-private partnership-based MTET and TVEC; (iii) COTs for expanding post-secondary education in higher level technical skills development for non-university education; (iv) BOMs of COTs with greater involvement of the private sector; and (v) voluntary National Association of TEVT Providers and industry sector councils for quality assurance and standards setting and compliance.

6. Social Benefits 358. The project will assist the Government to address three of the country’s most serious socio-economic issues: the high rate of unemployment and under-employment among the educated youth, the persistence of high rates of poverty among the industrial and agricultural workforce, and the marginalization of women in the labour market. 359. The project will address the gender imbalance by increasing women’s participation in technician courses by a reasonable percentage. Social marketing and career guidance services will focus on promoting technology-based employment and technician training courses for young women. 360. A reasonable representation of the minority communities will be ensured in the intake of technician students to the COTs through the NTA scheme and the technician admission test.

Moreover, as the medium of instruction will be in the English Language, ethnicity and local language-related prejudices will be minimized and cross-cultural communication will be strengthened among the technician trainees in COTs.

7. Mental health 361. In 2001, highest suicides rate worldwide was reported in Sri Lanka. Many intellectuals link it with the 20 years of conflict, the weakening of religious values, family-life problems, general lawlessness and adverse affects of the economy. Unemployment was reported as a major contributor to suicides among the educated youth. The project will foster better employability among the trained youth. The technician curriculum will develop in the students more positive outlooks in life and social milieu that will lead to personality development and greater sense of belonging and security.

8. Poverty reduction 362. The establishment of COTs will provide more opportunities to the poor, ethnic minorities and marginalized communities. The HREF provides income-level linked awards to technician-students, mainly from the poor families. While the students from families below the national-poverty-line will receive full value award, reducing the scale of grants plus repayable loans will be provided to students from the families above the national poverty line. B. Assumptions and Risks 363. The overall success of the project in meeting its ultimate goal and objectives rests largely on the following assumptions: (i) peace and political stability will continue; (ii) HREF legislation enacted in Parliament; (iii) key stakeholders’ policy support and administrative reforms of the TEVT system; (iv) demand for new technologies and technician-graduates expands; and (v) activities encouraging dialogue with and participation of the private sector in project implementation.

1. Implementation Risk 364. Project implementation assumes that competent and experienced staff will be available for recruitment for the various project activities. To reduce risk, qualified staff from the PIU of the ongoing SDP may be rehired to take advantage of their experience and training. PIU will be properly staffed and compensated to ensure commitment and work motivation. Delays in project implementation usually occurs at the initial phase due to lack of budget allocation and slow mobilization of the PIU. Effective project implementation will be ensured with close coordination between the ministries and agencies concerned.

2. Institutional Risk 365. MTET requires significant capacity strengthening to become effective in building a private-public partnership-based TEVT system. The TEVT sector demonstrates weak governance and administrative structure. The project should overcome these. The BOMs of COTs can be quite effective in ensuring the private sector’s commitment to play the key role of promoting, patronizing and sustaining TEVT. The project provides for the development of private-public partnership based TEVT system through an incentive-driven scheme as the driver of change.

3. Technical Risk 366. More than 80% of the awards receivers may not have bank accounts. Potential social conflicts and wilful defaulting may adversely affect the repayment of the loans by those who will complete their courses. This can be overcome with the assignment of a reliable and accredited bank to administer the repayment of loans. 367. The project provides grant/soft loan facilities for private TEVT providers to upgrade their training capacity and quality. Any increase in the interest rate as a result of unforeseen devaluation may discourage loan applications or result in default of repayment of loans by the borrowers.

4. Social Risk 368. The social marketing and career guidance component runs the risk of its targeted audience not being receptive to the message and information drives. The Project will adopt a multi-pronged strategy through COTs, public media and community resource mobilization process. In addition, the assistance of selected career guidance centres will be sought for career orientation and conduct of admission test.

5. Overall Project Financial and Economic Sustainability 369. Government budgetary allocations are the main source of supporting TEVT in Sri Lanka. Other sources of income such as student fees, hostel charges and income-generating activities are not significant considering that education at all levels up to the undergraduate degree is free. There is almost no cost recovery in TEVT except nominal fees such as training fees for part-time students and trainees. 370. The impact of the project on the Government’s recurrent and capital budget will be minimal, hence, sustainable even after project completion. There will be no major civil works except for some building renovation and repair. Most of the operating budget will be sourced out from the collected tax levied to the private sector, amounting to $10 million annually, to be disbursed as NTAs to unemployed youth and school leavers on merits basis and as grants and soft loans for TEVT providers’ expansion and quality enhancement and the private sector’s productivity and quality improvement. The NTA scheme is expected to serve as a potential source of income for the physical development, quality improvement, incentives and sustainability of TEVT institutions. 371. The project envisaged generating capability in self-financing with the establishment of BOMs for COTs and the training of senior staff in entrepreneurial skills, performance-based financing, part-time learning, and strategic planning. Revolving funds will be established that will allow financial autonomy of COTs to be vested in BOMs. The lessons learned from successful institutional models on partnership and sustainability serve as rich sources of direction and inspiration for the project. The COTs as prototype technician institutions will be developed as models to benchmark and replicate on the experience of public-private partnership, self-financing and entrepreneurial management. 372. With the public-private sector partnership orientation of the project through incentive-driven packages, it is expected that TEVT, particularly in the development, quality assurance and provision of higher-level technical skills, will gradually shift to the private sector as the main

partner and operator while the Government assumes the role as a standards setter, facilitator and regulator of TEVT. This is the strategic goal of the Government for the TEVT sector. 373. While financial sustainability of the project remains fairly strong, there are still some uncertainties. Although 95% of the project has potential financing sources, almost 70% of the funding comes from the HREF, established by the Government in its budget proposals for 2003. Without the support of this fund the project cannot be financed or sustained even in the short term. The uncertainty of the availability of funds from this source arises since the Treasury manages it. The past experience suggests that when the government is experiencing revenue shortfalls in relation to government expenditures, the Treasury imposes budgetary ceilings on public spending and delays disbursement of funds. If the Government allocation for this project is also subject to such cut backs, the implementation of the project will face serious problems and consequences. The HREF not only finances the industry assistance, but also the HRIF training award, stipend and other expenditures. Any shortfall of the HREF to the project could totally disrupt the project. Another issue is that due to the dissolution of the Parliament, the HREF Act has not been approved by the Parliament. Submission delays of the Act to the parliament could also delay the commencement of the project implementation, which is currently planned for mid 2005. 374. It is recommended that the ADB obtain assurances of the approval of the Act before the commencement of the project as well as the continuity of funds from the HREF during at least the implementation period in accordance with the funding requirements from this source. 375. The long-term sustainability of the fund also remains highly uncertain. The ADB funds are limited only to the project implementation phase of five years. The continuity of HREF beyond the initial five years is, however, needed to derive anticipated long-term benefits from the project. The economic analysis also assumes the availability of HREF to continue with training award and stipend as well as to provide industry assistance. If this fund is not available, all these activities will have to be discontinued and as a consequence the project will become another training program similar to what is available at present. The industrial sector too would not receive assistance from the project to upgrade technology or skills of employees. 376. It is recommended that the ADB will undertake a review of the project in the third or fourth year of the project with particular focus on its impact on the economy, employment, foreign exchange earnings and demand for and marketability of graduates in the domestic and international labour markets. Based on the findings, the long-term sustainability of the project should be taken up with the government to ensure availability of HREF to meet financing requirements beyond the project implementation phase.

V. ASSURANCES A. Condition of Loan Effectiveness 377. The Government will meet the following conditions before the loan becomes effective:

(i) enactment of the Human Resource Endowment Fund (HREF) Act; (ii) establishment of the Project Implementation Unit (PIU); (iii) selection of the 10 proposed colleges of technology, three to four of them should

be located in the North and East Provinces, on competitive basis; and

(iv) agreed loan arrangements related to procurement, disbursement, accounting, auditing and format of financial reporting to ADB and Government.

B. Other Specific Assurances 378. In addition to the standard assurances, the Government has to make a number of specific assurances for effective project implementation and sustainability:

(i) the Government will ensure that sufficient budget allocations will be made to cover counterpart share and advance expenses needed for an effective project implementation, in particular, the HREF and HRIF;

(ii) establishment of the HREF/HRIF Administrative Support Services (HAS) through outsourcing to an international consulting/financial firm;

(iii) the Government will ensure the enactment of a law or amendment of existing law pertinent to the legal status, operation and financial sustainability of the partnership based colleges of technology;

(iv) MTET will constitute the BOMs of the Colleges of Technology with active involvement of the private sector and appropriate representation of other key stakeholders;

(v) at least 90% of the approved cadre of trainers, instructors and technical staff are appointed for the COTs;

(vi) the Government will ensure provision of replacements/substitutes for staff training and development in COTs;

(vii) the Government will ensure development of a Technician Admission Test for Technician applicants;

(viii) the Government will support the use of internationally benchmarked curriculum and training standards after validation by industry;

(ix) the Government will support the establishment of a voluntary association of TEVT providers (NATP); and

(x) the Government will take all necessary and appropriate measures to increase access of women and other disadvantaged groups in technician training courses.

C. Key Policies Needed 379. There are key policies that are requisites to project success and upon which the Government and ADB should agree. Appendix 28 presents a matrix of the key policies corresponding to the project components/sub-components.

Appendix 1 100

LIST OF PERSONS VISITED

(i) Ministry of Tertiary Education and Training

(a) Hon. Minister Kabir Hashim (b) Mr. Saman Ediriweera, Secretary (c) Mr. P.M. Leelaratne, Additional Secretary (d) Mr. A.H.M. Wazil, Coordination Secretary (e) Mr. Leslie Tissera, Sr. Asst. Secretary (f) Dr. Wickrema Weerasooria, Advisor

(ii) Ministry of Finance

(a) Mr. Faiz Mohideen, Deputy Secretary to the Treasury

(iii) Office of the Prime Minister

(a) Mr. R. Paskaralingam, Advisor to the Prime Minister (b) Mr. Eric de Silva, Chair, Human Resources Development Steering

Committee

(iv) ADB Sri Lanka Resident Mission (SLRM)

(a) Mr. John Cooney, Country Director (b) Ms. Shenuka Chanmugam, Economist (c) Mr. Amarasene Gamaathige, Social Sector/ Resettlement Specialist

(v) German Technical Cooperation (GTZ)

(a) Ms. Uta Borges, Program Coordinator (b) Mr. Franz Porsche, Senior Advisor (c) Dr. Michael Hirth, Chief Technical Advisor.

(vi) Japan Bank for International Cooperation (JBIC)

(a) Mr. H.A. Karunasena, Senior Project Officer.

(vii) Department for International Development (DFID)

(a) Mr. Jay Sellahewa, Second Secretary Development, British High

Commission

(viii) National Institute of Technical Education Sri Lanka

(a) Dr. Manomi Perera, Director General

(ix) National Apprentice and Industrial Training Authority

(a) Mr. B. H. S. Suraweera, Director (Training)

Appendix 1 101

(x) Tertiary and Vocational Education Commission

(a) Dr. Sujata Gamage, Director General

(xi) Department of Technical Education and Training

(a) Mr. Jayadeva Weerasinghe, Director General (b) Mr. K. R. G. Gunasinghe, Director (Planning)

(xii) Japanese International Cooperation Agency (JICA)

(a) Mr. Satoru Tankura, Senior Advisor, Human Resource Development,

Technical and Vocational Training Management (b) Dr. S. M. Punchi Banda, Senior Advisor (c) Mr. H. Tanaka, Asst. Resident Representative

(xiii) Vocational Training Authority

(a) Prof. Hemasiri Kotagama, Chairman (b) Mr. C.R. Samaraweera, Assistant Director (training)

(xiv) Sri Lanka Institute of Advanced Technical Education

(a) Mr. Mohan Wijesinghe, Director General

(xv) National Youth Services Council

(a) Mr. H.H.K.P.S. Kamaladasa, Officer in Charge, Training Division

(xvi) Skills Development Project

(a) Mr. David Lythe, Education Advisor (b) Mr. Michael Blee, Director, Career Guidance & Counseling Specialist (c) Mr. Hector Hemachandra, Project Director (d) Mr. Gamini Bambaradeniya, Project Manager - Staff Training and

Curricula Development

(xvii) Ceylon Chamber of Commerce

(a) Mr. Chandrarathna D. Vithanage, Asst. Secretary General

(xviii) National Chamber of Commerce of Sri Lanka

(a) Mr. Asoka de Z. Gunasekera, President

(xix) Skills Development Fund Ltd

(a) Mr. Buwaneka Samarasekera, Chief Executive Officer

(xx) GreenTech Consultants (Pvt) Ltd

Appendix 1 102

(a) Mr. Diyath Gunawardena, Director

(xxi) Marga Institute

(a) Mr. Basil Ilangakoon, Executive Vice-Chairman, Institute for Participatory Interaction for Development

(b) Mr. S. W. K. J. Samaranayake, Executive Director

(xxii) Sewalanka Foundation

(a) Mr. Tapan Kumar Barman, Head Consultant

(xxiii) University of Colombo

(a) Dr. S. T. Hettige, Professor and Chair of Sociology

(xxiv) Soala Steel Furniture

(a) Mr. Chaminda Abeygunawardena, Managing Director

(xxv) Phonex College of Clothing Technology

(a) Mr. R.U. Kuruppu, Director

(xxvi) Institute of Technology University of Moratuwa

(a) (Dr) T.A. Piyasiri, Engineer, Director (b) Mr. P.A.B.A. Ranjan Perera, Head, Division of Maritime Studies

(xxvii) Open University of Sri Lanka

(a) Mr. Cecil Fonseka, Dean Faculty of Engineering Technology (b) Mr. Joufer Sadique, Registrar

(xxviii) IDM Computer Studies(Pvt) Ltd.

(a) Mr. P. Lionel Perera, Director of Studies

(xxix) Federation of Chamber of Commerce and Industry of Sri Lanka

(a) Mr. Nihal Abeysekera, President

(xxx) World University Service (WUS) of Canada

(a) Mr. Patrick Brochard, Director, Project for Rehabilitation through

Education and Training (PERT)

(xxxi) Automotive Engineering Training Institute (NAITA)

(a) Mr. R A C Galapatthy, Deputy Principal

Appendix 1 103

(xxxii) Sri Lanka Technical College, Maradana

(a) Mr. H. A. Karunaratne, Vice Principal (xxxiii) City & Guilds

(a) Mr. Mufthy Hashim, Country Representative

(xxxiv) Sarvodaya International Divosion

(a) Mr. Gunasesena Jayakodige, Senior Executive

(xxxv) Ceylon German Technical Training Institute

(a) Mr. Gamini .S. Manchanayake, Director/Principal

(xxxvi) JobsNet-National Employment Sourcing and Delivery Project

(a) Mr. Priyantha Fernando, Project Director (b) Ms. Dileepa Manawadu, Manager – Media and Public Relations (c) Mr. Jayamapathi Kalatuarachchi, Manager – System Administration

(xxxvii) Department of External Resources, Ministry of Policy Development and

Implementation

(a) Mr. A. Kumarasiri, Director (b) Mr. P. M. Mahinda Gunaratna, Asst. Director

(xxxviii) United Nations Development Program (UNDP)

(a) Mr. Krishan C. B. Ratnayake, Program Associate

(xxxix) Embassy of Republic of Korea

(a) Mr. Ahn Gil-Won, Minister Counsellor

(xl) SAARC Chamber of Commerce & Industry of Sri Lanka

(a) Nawaz Rajabdeen, Vice President-FCCISL, Executive Committee

Member SCCI

(xli) The Republic of Bulgaria in Rhineland-Palatinate

(a) Mr. Karl Jurgen Wilbert, Honoracy Council

(xlii) The World Bank, Human Development Unit South Asia Region

(a) Dr. Rosita Van Meel, Sr. Education Specialist

(xliii) Ministry of Southern Region Development

(a) Mr. Chandrasena Maliyadde, Secretary

Appendix 1 104

(xliv) Clothing Industry Training Institute

(a) Mr. D.P.L.P. Jayaweera, Deputy Director

(xlv) Textile Training & Service Centre

(a) Mr. Tomiko Hashimoto, JICA Senior Volunteers Sewing Specialist

(xlvi) Industrial Technology Institute

(a) Mr. J.T.S. Motha, Manager Rubber & Plastic Technology Group

(xlvii) Rubber Research Institute of Sri Lanka

(a) Dr. W.M. Gamini Seneviratne, Deputy Director Research (Technology)

(xlviii) Fintech Engineering (Pvt) Ltd.

(a) Mr. Saliya Kaluarachchi, Chairman/CEO

(xlix) National Construction Association of Sri Lanka

(a) Mr. D.W. Balachandra, Chief Executive Officer

(l) National Gem and Jewellery Authority

(a) Mr. Tennekone Rusiripala, Chairman

(li) Central Industries Limited

(a) Mr Newton Wickramasuriya, CEO

(lii) Haycarb Group

(a) Mr. Parakrama Jayasinghe, Director - Engineering

(liii) Department of Inland Revenue

(a) Mr. K. Suseelar, Commissioner General

(liv) National Institute of Business Management

(a) Mr. Mithraka Fernando, Director General (b) Mr. S. C. Kaluarrachchi, Deputy Director – Management Development

(lv) University of Colombo School of Computing

(a) Prof. V. K. Samaranayake, Director

Appendix 2 105

EDUCATION AND TRAINING SYSTEMS IN SRI LANKA

Year of Schooling Vocational Certificate Craft-level / Higher Certificate Technician Diploma Prof.

DegreeLevel of

Education Age

20 25

19 24

18 23

17

NA

ITA

(ND

ES)

OU

SL (D

T)

Con

vent

iona

l Uni

vers

ities

(P

rofe

ssio

nal D

egre

ss)

University and Higher Education

22

16

SLIA

TE (H

ND

E)

ITU

M (N

DT)

21

15

CG

TTI 3

-4 y

rs.

(Hig

her C

ertif

icat

e)

20

14

NA

ITA

App

rent

ice

(1

-3 y

rs.)

19

13

VTA

(6 m

os. -

2 yr

s.)

DTE

T (N

CT)

2

yrs.

COLLEGIATE LEVEL GCE A-L18

12 Etc

.

1 - 2

yr

s. 17

11

SENIOR SECONDARY SCHOOL GCE O-L

16

10 15

09 Basic Skills Training 14

08

JUNIOR SECONDARY SCHOOL SECONDARY EDUCATION

13

07 12

06 11

05

PRIMARY SCHOOL PRIMARY EDUCATION

10

04 09

03 08

02 07

01 06

Appendix 3 106

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

A. Linkages to the Country Poverty Analysis Sector identified as a national priority incountry poverty analysis? Yes

Sector identified as a national priority in countrypoverty partnership agreement? Yes; Partnership Agreement signed in March 2002

Contribution of the sector/subsector to reduce poverty in Sri Lanka HRIP addresses the tertiary level educational and technological training needs of the active labor force that has been predominantly constituted of poor rural youth and aims to provide them with opportunities for career advancement and resources for socioeconomic empowerment. Education and training of the labor-force for productive employment is a current priority of the government. HRIP seeks to provide an alternative and much expanded path for technological higher education that would be parallel to the highly restricted the long-established university system thereby ensuring through employability, a higher income level and better living standard for the technician-graduates. HRIP through its National Technical Awards System (NTAS) will help the educated youths of the poor and marginalized families. While the HRIP’s immediately focus will be on the development of higher-level technicians, its long term and impact related role will be on poverty reduction.

B. Poverty Analysis Proposed Classification: Poverty Intervention PPTA activities involved the study of a number of studies and policy documents relating to the poverty context. These included; ADB, Poverty Reduction in Sri Lanka, 2001, World Bank., Poverty Assessment, 2002, The Framework of Poverty Reduction,2001, Government of Sri Lanka, ‘Regaining Sri Lanka’, 2002 and reports relating to the socioeconomic context. Despite having a medium level Human Development Index (HDI) of 0.730 (2001) which ranks Sri Lanka, 99th among the 175 countries; Sri Lanka remains a poor country. The effects of the low per capita GNP of US$820, poverty-wise is further attenuated by wide disparities in income distribution and regional disparities. With poverty lines computed (1995/1996) on the basis of household consumption of essential items, the incidence of poverty varied from to 14% in the Western Province to 37% in the Uva Province. When some additional items were included in the computation the figures were 55% and 23% respectively. Conflict related poverty is the main issue in the Northern and Eastern Provinces, left out of the poverty survey because of the conflict. Poverty concerns in Sri Lanka are complex and multi-dimensional. Pockets of absolute poverty, transitional poverty in dry-zone farmer communities, regional disparities in poverty, urban ultra-poor, poverty in marginalized communities, conflict related poverty in the North East and in the contiguous districts, HDI linked low literacy and poor health services in the plantation communities, gender and poverty, poverty linked migrant labor (i.e. housemaids), and income poverty among unemployed educated rural youth are the main poverty focus areas. “Income poverty is primarily a rural phenomenon in Sri Lanka with approximately 85% of poor households located in rural areas whereas the total rural population is around 75%” The families below the National Poverty Line are predominantly the rural poor. Currently, the country’s economy is dominated by the services and manufacturing sectors when compared to the agriculture sector up to the late 1970’s. In 2002, services accounted for 53.6% of the Gross Domestic Product (GDP) at current factor cost prices, 26.3% industry and 20.1% agriculture. As such a larger proportion of the population is dependent on agriculture with its shrinking share of the economy. Therefore a strategy required for addressing the poverty context is the provision of facilities to youth for employment in the expanding and more remunerative sectors of the economy while making all sectors including agriculture more productive. HRIP has been designed to address through TEVT such major problems nationally identified in the economic sector, particularly in relation to employment.

Appendix 3 107

C. Participation Process Stakeholder analysis prepared: Participatory consultations with a variety of stakeholders, including TEVT providers and employers were held during the PPTA. The Problem Tree in Appendix 8 is one outcome of such consultations. Participation strategy: The Social marketing programme, among others, will include the mobilizing of popular media and participatory process involving a range of beneficiaries, to reach out to youth in all parts of the country and project a positive image of productive TEVT.

D. Social Issues

Subject

Significant, Not Significant,

None Strategy to Address Issues Output Prepared Resettlementb None HRIP outputs do not cause

displacements. None

Gender Significant Mainly through strategic interventions in the provision of HRIP related facilities.

Please see the gender strategy.

Affordability Of some significance

Technical education in state institutions is free and poorer students are further assisted. NTAS provides assistance for placements requiring payment. Special assistance will be provided though HREF Corporate programmes for providing placements to trainees.

Prepared under NTAS and. HREF/HRIF provisions in TA Report

Labor Significant HRIP has as its main strategy the reduction of unemployment and enhancement of the income levels of the employed.

No separate plan prepared, buts fits into government strategy.

Indigenous People

None No

Other Risks/ Vulnerabilities

Of some significance

Mainly through loan assurances indicated in RRP.

Please see loan assurances suggested.

E. Gender Strategy 1. The rising educational levels of women and gender equality in accessing general education were some of the positive achievements of Sri Lanka following the introduction of universal franchise and the attainment of a degree of political autonomy in 1931. These progressive policies were assisted by a long historic Sri Lankan culture and liberal tradition regarding women’s education and employment. By the 1960s gender disparities in enrollment in educational institutions were minimal. It was also noted that there have been more girls than boys in secondary schools and the overall drop out rate has been greater for boys than for girls. Nevertheless and despite considerable progress towards gender equality, the number of women qualifying for engineering and technical studies in higher institutions remains limited (30%) and employment opportunities for women in the established engineering fields are also limited. The elements of the proposed strategy in relation to TEVT and particularly in respect of HRIP will concern:

Appendix 3 108

(i) Promoting the image of women (from all communities) as through social marketing efforts;

(ii) Advising girls, through Career Guidance Centres already established, on the selection of subjects at GCE O-L and GCE A-L, and the options available in higher level technical courses available;

(iii) Including in the job description of all staff at the proposed implementing agencies and technical colleges, a clause relating to improving the position of and conditions for women in technical education.

(iv) Providing of finances for special facilities for women (e.g. separate wash rooms, rest rooms for night workers);

(v) Gender disaggregating of all data maintained by the relevant authorities to facilitate monitoring and follow-up action;

(vi) Including women aware of gender concerns in decision making bodies dealing with technical education, and including women aware of gender concerns in the institutions set up to implement HRIP; and

(vii) According special importance to progress towards gender equity and identification of constraints in all review and benefit monitoring activities of HRIP.

F. Details Of Poverty And Social Analysis

1. Poverty in Relation to TEVT

a. Poverty Analysis 2. Sri Lanka ranks 99th among 175 countries in terms of the human development index (HDI) which was 0.730 in 2001. Despite having a medium level HDI, the country has a significant share of poverty. However, the comparatively high HDI is a reflection of better education, health and gender related indices. A higher literacy rate and improved health services enjoyed by the Sri Lankan communities over the years were the results of appropriate historical investments in the social development and welfare sectors by the successive Governments. It contributed to reduce human poverty through social development. Nevertheless, the effect of the low per capita GNP of $820 is attenuated by wide disparities in income distribution, province–wise as shown by the table below.

Table A3.1: Incidence of Poverty based on Consumption by province

Province Population %

2001 (a) .

GDP share %2001 (b)

.

Incidence (with lower

poverty line) c

Incidence (with Higher

poverty line) c Western 28.6 47.3 14 23 Central 12.9 9.8 28 43 Southern 12.2 9.9 26 41 North Western 11.5 10.9 34 52 North Central 5.9 3.8 31 47 Uva 6.3 4.5 37 55 Sabaragamuwa 9.5 6.3 32 47

Sources: (i) Department of Census and Statistics 2001 (ii) Central Bank of Sri Lanka, Staff Studies Vol. 31/32–2001 (iii) Department of Census and Statistics, Household Consumer Survey 1995/1996.

Appendix 3 109

3. Poverty concerns in Sri Lanka are complex and multi-dimensional. Pockets of absolute poverty, transitional poverty in dry-zone farmer communities, regional disparities in poverty, urban ultra-poor, poverty in marginalized communities, conflict related poverty in the North East and in the contiguous districts, HDI linked low literacy and poor health services in the plantation communities, gender and poverty, poverty linked migrant labor (i.e. housemaids), and income poverty among unemployed educated rural youth are the main poverty focus areas. Income poverty is primarily a rural phenomenon in Sri Lanka with approximately 85% of poor households located in rural areas whereas the total rural population is around 75%. The families below the National Poverty Line are predominantly the rural poor. 4. Sri Lanka’s industries and service are customarily concentrated in the Western province and the incidence of poverty at 14% in the province was the lowest. Percentage of poor population in the other Provinces was relatively high: Uva 37%, North Western 34%, Sabaragamuwa 32%, North Central 31%, Central 28% and Southern 26%. 5. Conflict related poverty is the main issue in the North East and the share of the national GDP of North East Provinces fell from 15 % in 1980s to 4 % in 1997.1 It also resulted in 800,000 Internally Displaced Persons and lack of schooling for 57,000 school age children. Twenty years of conflict has demonstrated the extreme level of destruction caused by a man-made disaster.

b. Poverty and General Education 6. The highest incidence of poverty is observed among the people with just primary education, followed by those with lower secondary education. The level of poverty declines as the level of education rises. Refer to Table A3.2

Table A3.2: Incidence of Poverty by Education Level (1995,96)

Group % of Poor in the Group*

% out of Total Poor*

No Schooling Primary Lower Secondary Upper Secondary GCE O-L GCE A-L Graduates and Above

58 55 47 37 20 13 5

8 35 26 19 9 2 0.3

Source: Household Income and Expenditure Survey, DCS (1995/96) * Based on head count on higher poverty line

7. Education is perceived in Sri Lanka as a primary means of liberation from consumption poverty and other social disabilities. Until 1945, when the Free Education Scheme with free education all the way through university became effective, learning beyond the elementary level and in the English medium was an exclusive privilege of the children of the economically affluent. Thus the free education scheme together with the rapid expansion of schooling provided equal access and opportunities for all children and young persons up to the first-degree level at the universities. The free education system also provided thousands of poor rural children with stipends and placement in better schools, though 5th standard and 8th

1 World Bank Country Report – Sri Lanka 2000 , Recapturing Missed Opportunities

Appendix 3 110

standard scholarships. Nevertheless, considerable numbers were not able to benefit from these from these concessions owing to prevailing poverty conditions. 8. Sri Lanka Government provides assistance for the poor and lower middle-class youths (about 50%) in the Universities and Technical Colleges, through the schemes of bursaries and scholarships. The Government also pays the apprentice allowances monthly for the trainees undergoing practical training in industry for the skills development of the youths. The provision of free facilities and other assistance have enabled youth from poor families to compete with those from middle class and affluent families, on equal terms for employment in technical, professional, scientific and managerial jobs, despite initial positions of disadvantage. 9. Unemployment among the educated rural youth is a main socio-economic issue encountered in the rural sector in Sri Lanka. The higher unemployment rate among the better-qualified youth may reflect the lack of employment opportunities in keeping with their aspirations. Hence, the need for increasing job opportunities in the technical and service sectors requiring higher skills and training. Refer to Table A3.3.

Table A3.3: Unemployment Rate by Education Level 2000–2002 (% of Labor Force)

Year 5 Years or Less Schooling

6 –10 Years of Schooling

GCE O/L GCE A/L

2000 2001 2002

N/A 1.3 2.0

7.5 7.1 8.2

11.3 11.8 13.5

14.9 15.4 18.1

Source: Central Bank of Sri Lanka, Annual Report (2002) p.165

2. Technical Education and Vocational Training and linkages to Poverty

a. Courses of Study and Related Employment 10. Technical Education and Vocational Training schemes contribute for higher level of employment and enhance productivity level of the whole economy. A reasonable number of technical college students come from the low-income families. On graduation, technical college graduates work in the trade and craft levels such as Automotive Repairing, Electricians, Welders, Machinists, Masons, Machine Operators, Plumbers, Radio & TV Repairing, Refrigerators and Air Conditioning and Wood Work. The rate of employment, self-employment and unemployment of technical college graduates of 1995/96 (2 years after the date of graduation) are shown in Table A3.4.

Appendix 3 111

Table A3.4: Rate of Employment of Technical College Graduates by Course of Study 1995/96

Courses

Wage Employment

Full Time Self Employment

Unemployed

Others

Total

No. % No. % No. % No. % No. Draughtsman 219 66.4 15 4,6 65 19.7 31 7.0 330 Automotive 86 51.5 22 13.2 52 31.1 7 4.2 167 Electrician 113 64.9 11 6.3 39 22.4 11 6.3 174 Gas 2 Ark 52 47.3 13 11.8 49 44.5 6 5.5 110 Machinist 21 60.0 5 14.3 7 20.0 2 5.7 35 Masonry 17 54.8 4 12.9 7 22.5 3 9.7 31 Mechanical 61 60.4 9 8.9 20 19.8 11 10.9 101 Plumber 39 48.1 10 12.3 25 30.9 7 8.6 81 Radio & TV 45 51.1 14 15.9 27 30.6 2 2.3 88 Ref. & Air Co 25 59.5 1 2.4 14 33.3 2 4.8 42 Wood Work 49 37.4 36 27.5 43 32.8 3 2.3 131

Source: A Tracer Study of Technical College Graduates (1999/2000) by DTET: Table 3.3 11. While the engineering trades that are currently in high demand reported above 60 percent employment level, wage employment opportunities in the traditional trades (i.e. woodwork) remained limited.

b. Household Income of the Students Admitted at Selected Institutes. 2

12. Household Income of the students admitted to selected Institutes were analyzed to look into the income levels of the students. The analysis of the family income of the students attending Ceylon German Technical Training Institute (CGTTI), Labuduwa, Mattakuliya, Galle, Warakapola, and Anuradhapura are given in table below. The Institutes provided the data on the household income and the Institutes in turn had obtained the information from the students who applied for bursaries and stipends. The information therefore may be downward bias but obtaining the correct income from the households would always be difficult in any circumstance. Sixty percent of the families of students at Mattakuliya and Labuduwa received an income below SLRs6,000 per month and 44% of the students at CGTTI receive an income below SLRs6,000. Additionally, 97% of the families of students at Labuduwa, 81% of the Mattakuliya and CGTTI received an income less than SLRs10,000. At Warakapola 100% of the students receive an income below SLRs4,000. At Anuradhapura 88% of the students receive an income below SLRs6,000. The affluent students who are not qualified to enter the universities in Sri Lanka have the opportunity to follow accountancy course (CIMA and Chartered-SL), computer degrees and foreign degree courses in Sri Lanka or go abroad for higher studies. Therefore, it can be presumed that it is the comparatively poor students who would attend the programmes offered by SLIATE, CGTTI or TTI-Katunayake. Refer to Table A3.5.

2 The institutions were selected on the basis of the data provided by SLIATE.

Appendix 3 112

Table A3.5: Cumulative Percentage of Monthly Family Income of Students of Selected Colleges

Income

range (Rs per Month)

CGTTI

Mattakuliya

Labuduwa

Galle

Warakapola

Anuradhapura 0-999 0 16 9 9 46 25

1000-1999 0 27 19 28 63 54 2000-2999 2 33 33 34 79 67 3000-3999 7 44 44 57 83 75 4000-4999 16 52 48 76 100 83 5000-5999 44 61 56 88 100 88 6000-6999 58 67 61 91 100 96 7000-7999 64 73 65 93 100 96 8000-9999 81 84 74 98 100 96 10000 & over

100

100 100 100 100 100

Sources: SLIATE and CGTTI

13. The entitlement to assistance from the Mahapola scheme is based on a formula that combines merit, family income, and the distance from the Institute. On this basis, a student is entitled to receive assistance of SLRs650 from the Mahapola fund for 27 months of the total study period of 42 months. At present only 20% of the total students in Technical Colleges (TCs), who are entitled to receive Mahapola assistance receive such assistance, while 90% of the students at (Institute of Technology University of Moratuwa (ITUM) receive Mahapola and Bursaries worth SLRs1,250. Table A3.5 above shows that 60% of the families of students at Mattakuliya and Labuduwa received an income below SLRs6,000 per month and 44% of the students at CGTTI received an income below SLRs6,000, which is below the poverty level.3

3. Poverty Reduction through Skills Development Project 14. The Skills Development Project (SDP) with an ADB loan amounting to $18.8 million was planned to improve the quality and relevance of skills. Training programmes were aimed at building a high-quality workforce and address the issues of skills mismatch and unemployment among rural and urban youth. The poverty impact of SDP was expected to be substantial, as the project would have opened up skills training and job opportunities for rural and urban youth from low-income families, either through paid employment or from self-employment. Within the life span of the project, the incremental benefits to the poor workers would have manifested by way of potential for increased earnings. Using the minimum base salary of SLRs3,600 ($52.00) per month that each full time trainee can obtain from formal employment without taking the courses, the project was expected to improve the skills of the trainees to make them more competitive and earn a more reasonable salary within the range of SLRs5,000 ($73) to SLRs9,000 ($130) per month. 15. The expected net benefit from the stream of incremental earning and project cost was typically high for low-income groups. The increased earning has been meant to benefit the 3 The Preliminary Report on the Household Income and Expenditure Survey -2002 defines poor households as those spending more than 50 percent of the expenditure on food and average adult equivalent food expenditure is less than SLRs1,338.48 per adult per month are considered as poor households (based on 2002 survey data) Average family size is taken as 4.5. Total income of the poor household would be SLRs6,023.16

Appendix 3 113

trainees since (i) most of the fulltime trainees come from the unemployed or underemployed group and, hence have little or no prior earnings during the training period of one year and (ii) they do not have to pay private fees and unit training costs attributable to recurrent cost as this was subsidized by the government. The project expected to integrate a larger number of women in to the economy and support job creation through entrepreneurship courses and self-employment promotion, with particular attention to providing this opportunity to women. 16. The availability of poverty related Impact Monitoring Information on SDP remains limited. Early attention would be required to generate timely and accurate information on poverty impact of the project through field surveys and evaluation studies. G. Gender in Relation to TEVT

1. Progress towards Gender Equality and Continuing Residual Gender-wise Disparities

17. The rising educational levels of women and gender equality in accessing general education were some of the positive achievements of Sri Lanka following the introduction of universal franchise and the attainment of a degree of political autonomy in 1931. These achievements were the outcome of positive educational polices introduced in the 1940s – policies that: introduced free primary, secondary and tertiary education in state institutions, incentives such as scholarships and the progressive system of an extensive system of schools. These progressive policies were assisted by a long historic Sri Lankan culture and liberal tradition regarding women’s education and employment. By the 1960s gender disparities in enrollment in educational institutions were minimal. It was also noted that there have been more girls than boys in secondary schools and the overall drop out rate has been greater for boys than for girls. As Sri Lanka’s population is predominantly rural based, the student population is also mostly rural, and there are no significant gender differences in enrolment between rural and urban areas. Nevertheless and despite considerable progress towards gender equality, the number of women qualifying for engineering and technical studies in higher institutions remains limited (30%) and employment opportunities for women in the established engineering fields are also limited. With regard to employment the concerns that remain are:

(i) The higher unemployment rate for educated females; labour force participation of women has remained approximately 33% for women and 67% for men in the past decade. The rate of female unemployment has been higher than male unemployment in the last 10 years. In 1993 the total unemployment rate was 13.8% but female unemployment was 21.7%. In absolute terms, however, the number of unemployed males and females are almost equal.

(ii) Women are employed in low skill occupations outside the public service; the majority of women are employed in low skill occupations, while males dominate the skilled categories of technicians and associate professionals. Additionally women are also relatively immobile across occupational categories. However, the educational level of employed women is significantly higher than men, 19.7% of employed females have qualification above GCE (A-L) while the figure for males is 10.6%. For GCE (O-L) the figures are comparatively more equal at 15.6% and 15.1% for males and females.4

(iii) Women are relatively immobile across occupational categories, despite the higher educational levels attained.

4 Labour Force Survey, 3rd. Quarter 2002.

Appendix 3 114

18. Analysis of employment by sectors reveals that women workers tend to be found in significant numbers in relatively few sectors of the economy whereas men appear to have far more diverse employment opportunities. A larger percentage of women than men are employed in agriculture and in the manufacturing sector. But female employment in manufacturing predominates when taken as a proportion of total male or female employment or even in absolute numbers5 A significant feature is their concentration in key exporting industries, garments (nearly 90% of the workforce in the garment sector is comprised of women), textiles, pottery, China and earthenware and jewelry manufacture.

2. Impact of TVET Sector in Addressing Unemployment and Employment Issues of Educated Females

19. The fact that females have had equal high or higher school enrolment means that in theory they also have equal access to vocational training opportunities in Sri Lanka. Although there was a wide gender disparity in enrolment in the early years when vocational training first became available in Sri Lanka, there has been a steady increase in the enrolment of women in vocational training institutes over the years. For instance, at DTET nearly 40% and, at SLIATE and 55% of the enrolment are women. Yet the fact that the majority of female students at the secondary level are qualified in arts related subjects, coupled with stereotypical attitudes held by women themselves as well as vocational institutes, means that in enrolment into vocational and technical training there is a gender imbalance in the type of courses that women enroll and have access to. Women not only have access to a more narrow range of vocational skills but also have tended to be concentrated in what are considered ‘feminine’ occupations. In DTET, for instance, while approximately 40% of those enrolled are women, a close look at enrolment in individual courses reveals gender imbalances. For instance in engineering, the percentage of women enrolled is minimal, being only around 20%, and in craft level technician course only 6% are women. In the traditionally "feminine" courses such as secretarial, home economics, and batiks, women account for 90% of the enrolment. In SLIATE, total enrolment of women between 1998 and 2002 was over 50% (see table above). Enrolment in engineering was only 25% in 1998, but has shown a steady increase over the years. In 2002 there were 39.2% of women enrolled in engineering. H. Ethnicity 20. In Sri Lanka, ethnicity issues in education are reflected in the medium of instruction and the location of the institutes. Enrolment of students at the Advanced Technical Institutes (ATIs) managed by SLIATE showed that the number of students from the minority communities were insignificant in the ATIs situated in the provinces other than the North and the East (NE) of the 17 Institutions managed by SLIATE, 4 are in the NE and 13 are in the South. 21. SLIATE courses are conducted in the Sinhala, Tamil and English media based on the needs of the region. The ATIs in the Southern regions conduct courses mainly in Sinhala medium. This may be one reason for the low participation of Tamils and the Muslim students in the ATIs. Few Tamil medium courses are conducted at Dehiwela and Kandy ATIs in the Southern regions. The ATIs in NE conduct courses mainly in the Tamil medium and Tamils and Muslims living in the North and the East study in the Tamil medium. The four ATIs at Mattakuliya, Labuduwa, Ampara and Naiwela conduct courses other than business studies in

5 Gunathilaka, Ramani, Labor Legislation and Female Employment in Sri Lanka, Institute of Policy Studies, July 1999

Appendix 3 115

the English medium. Mattakuliya ATI’s engineering courses, IT courses at Labuduwa ATI and agricultural courses at Ampara and Naiwela are held in English medium. For the last 5 years in the ATI at Mattakuliya about 11% students come from the minority communities. 22. Using English as the medium potentially increase the level of participation of the ethnic minority communities at ATIs. With regard to the other TEVT institutions outside NE region a similar situation though less pronounced exists. In Trincomalee the number of participating in Sinhala students is very low, although ethnically they form 25% of the district population. I. Other Concerns

1. Peace Building 23. Sri Lanka has hopefully entered an era of peace after two decades of war. Strengthening and expansion of TEVT system will increase opportunities for enhancing technical and vocational skills and employability of educated youth in both-sides of the ethnic divide. In the context of the ongoing discussions on peace, reconstruction and reconciliation positive role will be available for the trained and competent labor force. The educated youths will take pragmatic approach on peace issues and would prefer dialogue and reconciliation on the conflict related issues.

2. Ideological Bias of the Youth 24. Educated youth in Sri Lanka, as elsewhere, find radical and left-oriented approaches on social and political issues attractive. This is true of the students following HNDE courses, and those at SLIATE, SLITE and ATIs As such they look at policies of any current political administration with suspicion. These are reinforced by their perceptions as well as the realities of inadequate facilities, discrimination regarding bursaries, aspirations for affiliation to Universities, management inefficiencies and external political intervention. But the machinery for objective study, analysis and resolution of these grievances is inadequate or minimal.

3. Greater Access and Coverage 25. Education and training of the labour-force for productive employment is a current priority of the government. While state sector employment opportunities are decreasing, private sector and foreign labor market demand (i.e., Middle-East countries) provide expanding opportunities for the employment of technically competent persons, especially high quality technicians. The project should result in improved employability, higher income level and better living standard for the technician-graduates in Sri Lanka. It elevates the pedagogical standard of the technological training system in Sri Lanka and opens an alternative path for technological higher education that would be parallel to the long-established university system. 26. The project addresses the tertiary level educational and technological training needs of the active labor force that has been predominantly constituted of poor rural youth. Over the years, academic excellence was rewarded with power, authority, better remuneration and higher social status in the government sector and the technicians were regarded as less educated “manual labor” merely interested in bread & butter. The project provides them with opportunities for career advancement and resources for socioeconomic empowerment.

Appendix 3 116

4. Project Strategies 27. The Framework for Poverty Reduction (FPR) was the result of a three-year analytical and consultative process from 1998 to 2001 involving a large number of government agencies, donors, research institutions and NGOs. It advocated a three-pronged strategy to achieve poverty reduction: (i) Creating opportunities for pro-poor growth; (ii) Strengthening the social protection system; (iii) Empowering the poor and strengthening governance. FPR signaled a fundamental shift from the traditional role of direct government spending and restricting private economic activities to a new role of the government to create an enabling environment for poverty reduction. Subsequently, “Regaining Sri Lanka” carried FPR based logic and arguments further to encourage private sector focused economic development process. 28. HRIP encourages public-private partnership for the conducting of demand-driven and qualitative TEVT for enhancing productivity and creating opportunities for pro-poor growth in the economy. Immediate and specific purpose of the project will contribute for the expansion of the high-quality skilled technicians required for productivity enhancement in the industry. While the HRIP’s immediately focus will be on the development of higher-level technicians, its long term and impact related role will be on poverty reduction. Efficiency and effectiveness of HRIP will depend on its flexibility toward balancing the immediate and short-term results with the long-term benefits. 29. The immediate benefits of the National Technical Awards Scheme (NTAS) will be available to the selected students of ATIs, including the educated youth of the poor and marginalized families. HREF training programs will provide further opportunities for lowly paid TC graduates to improve their training up to the technicians’ level. Development of quality assurance and technical standards of TEVT will contribute to improve the social status of the technician graduates. 30. HRIP based social marketing will be focused on women and it will attract higher percentage of women to follow technician courses. Further social marketing will be promoted to attract Muslim and Tamil students as well as educated poor youth to follow the technician training courses.

Appendix 4 117

DISTRIBUTION OF TEVT PROVIDERS BY DISTRICT VTA NAITA

National Training#

Districts Rural District Special National Total DTETCentre Centre INGRIN CITI NITESL SLIATE UGC GOVT NGO PRIVATE SB

GrandTotal

1 Ampara 11 1 1 - 13 3 - 1 - - - 2 1 4 1 3 16 442 Anuradhapura

15

1 - - 16 1 - 3 - - - 1 1 19 6 5 18 703 Badulla 10 1 - - 11 2 - 3 - - - 1 - 23 2 9 11 624 Batticaloa 4 1 - - 5 1 - 1 - . - 1 1 2 4 2 17 345 Colombo 14 - - 3 17 3 2 7 1 1 1 2 4 21 33 131 48 2716 Galle 22 1 5 1 29 2 - 3 - - - 2 - 15 4 17 33 105 7 Gampaha 13 1 - - 14 1 1 2 - - - 1 1 12 13 40 27 1128 Hambantota

11 1 . - 12 2 - - - - - 1 - 16 4 4 15 54

9 Jaffna 1 - - . 1 1 - 1 - - - 1 1 2 2 2 4 1510 Kalutara 8 1 - - 9 1 - 3 - - - 1 - 8 8 9 23 6211 Kandy 11 1 - - 12 3 - 2 - - - 1 1 19 7 22 17 8412 Kegalle 10 1 - - 11 2 - 1 - - - 1 - 5 2 17 12 5113 Kilinochchi - - . . 0 - - - - - - - - - - - - 014 Kurunegala

15 1 . - 16 3 - 4 - - - 1 1 7 12 26 40 110

15 Mannar - - - - 0 - - - - - - - - 1 - - - 116 Matale 7 1 - - 8 2 - - - - - - - 3 1 5 15 3417 Matara 13 1 2 - 16 1 - 6 - - - 1 - 13 10 14 23 8418 Moneragala 12 - - - 12 2 - 3 - - - - - 4 4 3 8 3619 Mullative - - . - 0 - - - - - - - - - - - - 0

20 Nuwara-Eliya 2 - - - 2 1 - 1 - - - - . 3 5 6 10 28

21 Polonnaruwa 4 - - - 4 1 . 1 - - - - - 17 - 11 10 4422 Puttalam 8 1 - - 9 1 - 1 - - - - - 3 2 11 11 3823 Ratnapura 13 - - - 13 2 - 3 - - - 1 1 7 5 9 15 56

24 Trincomalee 2 - - - 2 1 - 1 - - - 1 - 4 2 4 6 2125 Vavuniya

1 - - - 1 1 - 1 - - - - - 1 1 - - 5

Total 196 13 7 4 233 37 3 48 1 1 1 19 12 209 128 350 379 1,421

Appendix 5 118

DISTRIBUTION OF MAJOR PUBLIC PROVIDERS OF TEVT BY PROVINCE AND DISTRICT, 2003

Province /District

Population‘000

Persons Yr- (2000)

SLIATE

DTET

VTA

NAITA

TOTAL Western Colombo Gampaha Kalutara

2,266 2,077 1,069

2 1 1

3 1 1

18 14 10

9 3 4

32 19 16

Southern Galle Matara Hambantota

1,000 770 529

2 1 -

2 1 2

23 16 12

3 4 2

30 22 16

Central Kandy Matale NuwaraEliya

1,288 448 707

1 - -

3 2 1

11 8 2

2 - 1

17 10 4

North Central Anuradhapura Polnnaruwa

754 363

1 -

1 1

16 4

3 1

21 6

North Western Kurunegala Puttlum

1,461 713

1 -

3 1

16 9

3 1

23 11

Sabaragamuwa Ratnapura Kegalle

1,020 784

1 1

2 2

13 12

3 1

19 16

Northern Vavuniya Jaffna Mulaitivu Mannar Kilinochchi

146(a) 532(a) 164(a) 98(a) 154(a)

- 1 - - -

1 1 - - -

1 1 - - -

1 1 - - -

3 4

Eastern Ampara Batticaloe Trincomalee

596

522(a) 358(a)

2 1 1

3 1 1

15 4 2

1 - 1

21 6 5

Uua Badulla Monaragala

787 401

1 -

2 2

11 12

3 2

17 16

TOTAL 19,007 18 37 230 49 334 Source: Census and Statistics for population and SLIATE, DTET, VTA and NAITA for numbers of institutions 2002

Appendix 6 119

TEVT SECTOR ANALYSIS A. The Technological and Technical Education and Training Systems

1. Technological and Technician Education Systems 1. The system of post-secondary higher technical education is relatively under-developed. Only a limited number of mandated public providers and a few enterprising private technical institutions with foreign affiliations are engaged in higher technical skills development. This is the main reason for the bottleneck when responding to labor market demands and economic competitiveness. Technological education is a new direction towards the development of human resources in higher- level technologies. This is in response to national and global demands for higher-skilled technicians, technologists and the so-called knowledge workers. It provides vertical mobility for holders of Higher National Diplomas in Science and Technology to aspire for higher education for their own life-long development and self-fulfillment. Essentially, it serves as a new channel for those who are not admitted to the universities due to quota limitations. Through this stream, they can continue to pursue their aspirations to obtain higher and professional education. So far, only one institution of higher learning in the country has addressed this need, which is carried out in an open or distance learning mode – the Open University of Sri Lanka (OUSL). 2. Technician education and training is at the post-secondary level, which caters to those who received relatively good marks in Mathematics, Physics and Chemistry in their GCE A-L examination. The programme duration is for a minimum of three years. Its objective is to prepare the students to become versatile technicians in a broad spectrum of work between that of an engineer and of a skilled worker. Generally, the curriculum of studies includes about 60% practical content and 40% theoretical. After completing the programme, the student is awarded a diploma such as a Higher National Diploma in Engineering (HNDE), a National Diploma of Technology (NDT), a National Diploma in Engineering Sciences (NDES) or a Diploma of Technology (DT). There are at least four models recognized in Sri Lanka with their unique features and are carried out by separate institutions – an apprenticeship and industrial training authority, institutes of advanced technical education and at the university level.

a. The NAITA Model 3. This is a technician education programme, which is carried out at the Technician Training Institute (TTI), Katunayake under NAITA. The Institute was established in 1985 under the Sri Lanka government/International Labour Organization-United Nations Development Programmes (ILO-UNDP) project with the objective of expanding the country’s capability to provide middle managerial level engineering personnel for the needs of industry and to support an expanding economy. The programme is a four-year (full time) and a sandwich-type course patterned after the dual-training system of Germany. The modes of training include institutional instruction and industrial training, which are alternately held at the institute and at the industrial sites. Examinations and evaluations are conducted at the end of each phase of the programme, with the participation of industry. Table A6.1 presents an idea of the phasing, duration, general content and alternate venues of the training programme.

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Table A6.1: The Technician Training Cycle Phase

Duration (Wks)

Content

Venue

1

27

Basic Instruction Programme, including English language

Institute

2 39 Basic Industrial Training Industry 3 23 General Instruction Programme Institute 4 52 General Industrial Training Industry 5 23 Specialized Instruction Institute 6 44 Specialized Industrial Training Programme Industry Total 208

Source: Technician Training Institute, NAITA, 2003. 4. The institute is presently offering courses in three engineering fields with selected specializations (refer to Table A6.2). The curriculum design of courses is generally based on a fifty-fifty ratio of practical and theoretical content. 5. The educational qualifications needed for admission to the programme is normally a pass at the General Certificate of Education (GCE) Ordinary Level (O-L) examination in six subjects in one sitting, including a minimum of three credit passes. In addition, the following entry qualifications are considered for admission: (a) passes at the GCE Advance Level (A-L) – old syllabi in Pure Mathematics, Applied Mathematics and Physics in one sitting, or (b) passes at GCE A-L – old syllabi in Pure Mathematics, Applied Mathematics, Physics and Chemistry in two sittings, or (c) passes at GCE A-L – new syllabi in combined Mathematics, Physics and Chemistry in one sitting. The admission age is between eighteen and twenty-five years old. Admission to the programme entitles a student to receive a free education plus a monthly stipend of SLR600 per month.

Table A6.2: Courses Offered at the Institute Major Field Specialization

Civil Engineering

Building and Structural Engineering Highway and Railway Engineering Water and Environmental Engineering

Electrical Engineering

Electrical Power Engineering Electronics Engineering Telecommunications Engineering

Mechanical Engineering

Automotive Engineering Mechanical General Engineering Marine Engineering

Source: Technician Training Institute, NAITA, 2003. 6. The course leads to the award of a National Diploma in Engineering Sciences (NDES) by the institute after the student successfully completes all requirements of the programme. The Government recognizes this qualification for recruitment to Class IIb of the Sri Lanka Technological Service. Also, the Institution of Engineers Sri Lanka (IESL) accepts the NDES for admission of students as members and for enrolment as students for the IESL Part I Course.

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Even the Open University of Sri Lanka (OUSL) recognizes the NDES for exemptions in Level 3 of their six-level course leading to the degree of Bachelor of Technology.

b. The SLIATE Model 7. Another curricular model in technician education is the Higher National Diploma in Engineering (HNDE) programme offered at the Advanced Technical Institutes (ATIs) under SLIATE. The programme lasts for three and one-half years, including a six-month in-plant training period under NAITA’s supervision. At present, three areas of specialization are offered: Civil, Electrical and Mechanical Engineering. The entry qualification is normally a pass of the GCE (A-L) Examinations (Old Syllabus) with four passes (Applied Mathematics, Pure Mathematics, Physics and Chemistry) in one sitting or a pass of the GCE (A-L) Examinations (New Syllabus) with three passes (Combined Mathematics, Chemistry and Physics) in one sitting. In addition, a pass in English language at GCE (O-L) is required. 8. The HNDE programme is structured on an annual basis, which may soon shift to a semestral basis in the next school year. Each academic year is divided into three terms of ten-week duration. The programme is generally institute-based for both practical and theory courses, as compared with the technician education programme at NAITA. However, the curriculum design is based on an almost fifty-fifty proportion of practical and theoretical content. There are three examinations during the programme, including two internal examinations and a final external examination conducted by the Department of Examinations of Sri Lanka under the Ministry of Human Resources, Education and Cultural Affairs. Passing the required examinations and successful completion of the in-plant training will lead to the award of a technician diploma. 9. The Council of Engineering Institute of the United Kingdom has validated the HNDE programme by granting an exemption for its Part I examinations. Its local validation is given by the Ministry of Public Administration, which grants equal status with the NDT awarded by the University of Moratuwa. 10. There are other HND programmes offered at SLIATE requiring a pass of GCE (A-L) examination as the entry qualifications. These allied courses are in Accountancy, Management, Information Technology and Agriculture with durations ranging from two years to four years, in the case of evening programmes. No course fee is levied for day (full-time) programmes. Instead, students who qualified for admission are given a monthly stipend of SLRs650 per month and bursaries to some of those who qualified in the means test.

c. The Conventional University Model 11. This model of technician education programme leads to a National Diploma in Technology (NDT), which is implemented by the Institute of Technology of the University of Moratuwa (ITUM). The programme has duration of three years, including two years of full-time studies in the institute and one year industrial training under the supervision of NAITA, the government agency mandated by law to undertake apprentice and industrial training. 12. The fields of specialization in the NDT programme are Civil, Chemical, Electrical, Electronics and Telecommunications, Marine, Mechanical, Nautical, Polymer, and Textile and Clothing. The curriculum mix does not differ much from most of the other models of technician education programmes, which are both theory- and school-based. The entry qualification for these courses is a pass of the GCE (A-L) in the Mathematics stream. In addition, an aptitude

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test is given to improve the student selection process. As a special feature of the curriculum, all students are required to pass basic courses held four hours a week for one year. Presently, the facilities and equipment used for instruction and laboratory work of students are on a co-sharing arrangement with the Faculty of Engineering. Only a few courses have their separate building facilities for workshops and training laboratories.

d. The Open University Model 13. The Open University of Sri Lanka (OUSL) is the only institution in Sri Lanka which offers technician and technological education programmes leading to a diploma and a degree in Engineering Technology. The Faculty of Engineering Technology (FET) is responsible for carrying out these programmes. OUSL differs from the conventional universities, technical colleges and institutes in that it makes use of flexible delivery and distance learning modes. This educational approach provides greater opportunities for employed persons without restrictions with regards to age and/or educational background. The OUSL has a student population of about 20,000, spread in twenty-one regional and study centres throughout the country. 14. The Diploma in Technology (DT) is comparable with the NDT, NDES and HNDE programmes of the other institutions as presented earlier. It is one of the avenues for entry to middle-level technical grades within the engineering profession. The minimum programme duration is four years. The OUSL awards the DT to students who have acquired nine credits (now 8.5 credits under the revised curriculum). Refer to Table A6.3 for the distribution of credits by course areas.

Table A6.3: Courses and Credits for the Diploma in Technology Programme Course

Credit

Engineering courses

5–6 subject to a minimum of three credits at Level 3 or above, of which at least one credit is at Level 4 or above

Mathematics 1 2/3–2 Engineering projects 1/3 General courses 1/3 Management 1/3 Industrial/academic course

1/3

English 1/3 Computer literacy 1/6 Training/Practice 1 Total

9.0 subject to minimum of 4 credits being at Level 3 or above, of which at least one credit is at Level 4 or above

Source: OUSL Faculty of Engineering Technology Student Guidebook 2003. 15. Each course that a student takes is assigned a credit value. A course with one credit requires 450 hours of study, a half-credit course 225 hours, a one-third-credit course 150 hours and a one-sixth-credit course seventy-five hours. Each course is also assigned a level, from one to seven. Courses at Levels 1 and 2 are foundation courses (or certificate/advanced certificate)

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courses. Levels 3 and 4 are diploma courses while those at Levels 5 and 6 are degree courses. Post-graduate diploma courses and Master’s courses are Levels 6 and 7, respectively. 16. Normally, a student may register for up to two credits from Engineering, Projects, Mathematics, General Management, Industrial or academic categories of courses. For a full-load student, the total compulsory attendance is unlikely to exceed twenty-four days in a year. Each course is assessed separately which consists of continuous assessment and final examinations with equal weights. Continuous assessment is a means of facilitating learning which is carried out in such activities as laboratory work, field classes, assignments, presentations and continuous assessment tests. The areas of specialization are in Agricultural, Automobile, Civil, Computers, Electrical, Electronics and Communications, Manufacturing and Textile Engineering. 17. The Bachelor of Technology (BT) degree is awarded to students who have completed fifteen credit units (now 13.5 credits under the revised curriculum) inclusive of the nine (now 8.5) credits earned under the DT programme. A minimum of seven years is needed to complete the degree, although in practice, it often takes longer. Holders of the BT degree are expected to develop their creative, analytical and innovative thinking capabilities and to increase their ability to access knowledge. Normally, entry into this programme is through the DT, although other paths are also possible. The areas of specialization are highly similar with those offered in the diploma programme. Table A6.4 presents the distribution of credits by course areas.

Table A6.4: Courses and Credits for the Bachelor of Technology Course Credit

Engineering courses 8–10

subject to a minimum of three credits being at Levels 5 and 6, of which at least one credit is at Level 6

Mathematics 2 ½–3 1/2 subject to a minimum of ½ credit being at Levels 5 and 6

Engineering Projects 2/3–1 1/2 subject to a minimum of 2/3 credit being at Level 6

General Courses 1 ½–1 Management ½–1 Industrial/Academic Courses 1/3 English 1/3 Computer Literacy 1/6 Training/Practice 1 Total

15 subject to a minimum of six credits being at Levels 5 and 6

Source: OUSL Faculty of Engineering Technology Student Guide Book 2003. 18. In comparison, the Government Colleges of Technology (GCTs) in Pakistan are organized mostly from existing polytechnics in the provinces or in urban centers. These colleges are allowed to continue with their technician education programmes and at the same time offer

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the B Tech programme (Pass), with duration of two years, to cater to the needs of employed diploma holders. This is done through affiliation with a recognized university. Even the newly developed B. Ed (Tech) programme for pre-service education of technical teachers draws its teacher-trainees from diploma holders. 19. Recently, a two-year programme was introduced at the OUSL, which requires six credits for the award of an Advanced Certificate of Technology (equivalent to an Associate Degree or NCT level). The entry qualification is a pass of the GCE (A-L) examinations. Completing the programme enables one to continue towards a B. Tech degree. Also, Mechatronics has been introduced as a subject and will soon be offered as a new field of specialization. 20. The OUSL, unlike most government universities and technical colleges, charges fees from the students which include a registration fee, a facilities fee, an exemption fee and tuition fees. Refer to Table A6.5 for the schedules of fees by level of courses.

Table A6.5: Tuition Fees per Credit by Level of Course Level of Course Tuition fees per Credit (SLRs)

1 - Foundation Courses 2,280 2 - Foundation Courses 2,280 3 - Diploma Courses 2,940 4 - Diploma Courses 2,940 5 - Degree Courses 5,280 6 - Master’s Courses 5,280 7 - Master’s Courses 14,060 Source: OUSL Faculty of Engineering Technology Student Guide Book 2003.

2. Technical Education and Training System 21. Technical education is at the post-secondary level, which caters to students who have passed the GCE O-L examinations. The objective of technical education is to prepare the youth to become craftsmen or skilled workers in a range of jobs and occupations. The National Certificate in Engineering (craft courses) is the main programme of the technical education system in the country. Usually, this caters to those who pass the GCE (O-L) examinations in six subjects with passes in Mathematics and Medium Language in not more than two sittings. The full-time programme is of two-year duration. The curriculum is designed for a 60% to 70% practical and a 30% to 40% theoretical content, with credits given to every subject on a semestral basis. The lead agency in offering technical education programmes is the Department of Technical Education and Training (DTET). Major public TEVT providers such as the VTA, DTET, NAITA, NYSC and other Ministries also offer craft-level and certificate courses. The courses provided by the CGTTI are offered to candidates with GCE (O-L) qualifications.

3. Vocational Training and Apprenticeship Systems 22. Vocational and apprentice training is another way of catering to the informal sector and the unemployed youth who lack skills and those who either drop out of the school system or fail to qualify for admission in the technical colleges. Usually, vocational training programmes range from three months to one year in duration. The programmes are skill-based and are designed to have 80% practicum and 20% related theory. The pass-outs are employed in semi-skilled or

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operator’s jobs after completing the course and after being certified as to their skill proficiency. Usually, the admission requirements for vocational courses are to complete Grade 9 and to be not less than seventeen years old. VTA is the premier organization for vocational training. 23. On the other hand, apprentice training is done by NAITA, which is enterprise-based. There are institutes intended primarily for apprentice training such as the Automobile Engineering Training Institute and the Apprenticeship Training Institute. The courses implemented for apprentice training vary in duration, usually ranging from one to three years. Generally, the admission requirement is set at a pass of the GCE (O-L) examination. Courses offered for apprenticeship cover many sectors of industry such as telephone operator, baker and pastry cook, machinist, fitter, gem-cutter, pattern maker, tailor and sewing machine operator. 24. Figure A6.1 recaps the postsecondary technological education and vocational training systems showing the various streams and options for specialization towards obtaining a national certificate, diploma or professional degree in technology. B. Structure, Administration, Planning, Coordination and Development of TEVT 25. The technical education and vocational training (TEVT) sector is made up of various stakeholders, operators and interest groups from the government, private and non-government organizations (NGOs). At present, the Government is the main investor and provider of TEVT. Over the years, TEVT is undertaken by many ministries and has over-expanded with the establishment of autonomous bodies and departments. In addition, many enterprising private training providers have also emerged in TEVT provision without much government intervention or control.

1. The Ministry of Tertiary Education and Training (MTET) 26. The Ministry of Tertiary Education and Training (MTET) is the central body responsible for national policy execution, overall planning, and central coordination and promotion of tertiary education and training, including technical education and vocational training. The creation of the MTET and the consolidation of statutory bodies and other institutions that are mandated to provide public TEVT under one ministry was in the Gazette Extraordinary Part I: Section (I). Among others, two central statutory bodies were placed under the overall direction of the MTET, namely: the Tertiary and Vocational Education Commission (TVEC) and the National Institute of Technical Education Sri Lanka (NITESL). TVEC is the national body responsible for TEVT sector planning, setting national standards, awarding associate degrees, maintaining a national qualification framework, registration, accreditation and quality assurance systems. NITESL is responsible for developmental programmes, which include technical teacher training and staff development, curriculum and materials development, and promotion of graduate and post-graduate level programmes, and research in TEVT. Figure A6.2 gives the organizational structure of MTET.

2. The Tertiary and Vocational Education Commission (TVEC) 27. The Tertiary and Vocational Education Commission (TVEC) serves as the main arm of MTET with regards to planning, coordinating and monitoring of tertiary education and training. TVEC was established as a statutory body (Act No. 20 of 1990 as amended by Act No. 50 of 1999) with the following general objectives: (i) the planning, coordination and development of tertiary education and vocational education at all levels in keeping with the human resource

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needs of the economy; (ii) the development of nationally recognized systems for the granting of tertiary education awards including certificates and other academic distinctions; and (iii) the maintenance of academic and training standards in institutes, agencies and all other establishments that provide tertiary education and vocational education. 28. The Commission consists of seventeen members, six of whom represent the Government (mainly from the line agencies under MTET and a representative of the Ministry of Finance); a representative nominated by the trade unions and ten members representing the private sector as appointed by the President. The Chairman is drawn from among the appointed members and tasked with its administration. 29. Among the major functions of the Commission is the preparation of a development plan or plans for tertiary education and vocational education for approval by the President. Another major task is the registration of institutes for the provision of tertiary and vocational education, which are spelled out in the development plan such as the classification of the categories of persons and establishments providing tertiary or vocational education and specification of a tertiary or vocational course conducted by any person or establishment. The award of associate degrees, in accordance with the development plan, is another function of the Commission, which also includes the recognition of any institute other than an Institute of Higher Learning for the purpose of awarding associate degrees.

3. The National Institute of Technical Education Sri Lanka (NITESL) 30. The National Institute of Technical Education Sri Lanka (NITESL) is another important arm of the MTET. It was established in 1998 as a statutory body (Act No. 59 of 1998) to assist the Ministry and TVEC in formulating TEVT policy and for promoting teacher education, research and development. NITESL has metamorphosed from the National Technical Teacher Training College (NTTTC), which was established in 1983 under the then Ministry of Education and Higher Education with loan assistance from ADB. In 1994, it was renamed the National Institute of Technical Education (NITE) and subsequently placed under the umbrella of the DTET. 31. The administration, management and control of the Institute’s affairs are vested on a Board of Governors, which consist of two ex-officio members (the MTET Secretary and the TVEC Chairman as the Chair and Vice Chair of the Board of Governors, respectively) and five other members appointed by the Minister for a period of three years. Three of these members shall be entrepreneurs from the private sector. The Director-General is the Chief Executive Officer of the Institute under the general direction and control of the Board of Governors. He is appointed by the Minister in consultation with the Board and may be removed from office without assigning any reason and such removal shall not be called to question in any court. 32. The functions of the Institute, among others, include: (i) to continue all programmes, services and projects conducted by the NITE under the Department of Education and Training; (ii) to advise the Minister, and to advise and assist TVEC on the formulation of policy pertaining to human resource development and curriculum development in technical and vocational education, in accordance with the development plan or plans prepared by the Commission; (iii) to advise the Minister and to advise and assist the Commission regarding plans, programmes and activities pertaining to human resource development, curriculum development and research in Sri Lanka, in accordance with the development plan or plans prepared by the Commission; (iv) to monitor, on behalf of and at the request of the Commission, technical and vocational training standards by the institutes that provide programmes and services in technical and

Appendix 6 127

vocational education; (v) to provide such training programmes and services in technical and vocational education as may be approved by the Minister; (vi) to implement and maintain a system for examination and accreditation as determined by the Commission; (vii) to initiate and promote practices connected with the art of training teachers in technical and vocational education, including the adaptation of appropriate technology for training purposes; (viii) to provide professional services in the various functional areas of technical and vocational education and training, human resource development, curriculum development, teaching methodology, educational technology, vocational guidance and counseling; (ix) to provide and promote graduate and post-graduate level technical and vocational education and training; (x) to undertake and promote research and other studies on all aspects of technical and vocational education and training, including its performance, industry needs, evaluation of institutions and programmes, teacher training needs and social, economic and other aspects of technical and vocational education and training; (xi) to sponsor and hold conferences, seminars and workshops, and to publish books, journals and magazines in connection with all aspects of technical and vocational education and training, with the assistance of national and international organizations, where necessary; and (xii) to liaise and coordinate with other institutions, both in Sri Lanka and abroad, discharging functions similar to that of the Institute. 33. NITESL’s vision is to facilitate the development of a demand-driven technically skilled training staff in the tertiary and vocational education and training sector in Sri Lanka. In doing so, it has spelled out its mission, to wit: 34. To provide services of human resource development, curriculum development and instructional resource materials development for the tertiary and vocational education and training sector in Sri Lanka. C. Major Public TEVT Providers: Mandates, Structures and Programmes 35. Under the purview of MTET is a network of major public sector providers of TEVT, namely: the Sri Lanka Institute for Advanced Technical Education (SLIATE), the Department of Technical Education and Training (DTET), the Vocational Training Authority (VTA) and the National Apprentice and Industrial Training Authority (NAITA). Most of them are corporate bodies with separate and independent governing bodies and diverse organizational structures. A total of 334 TEVT institutions are operated and maintained by them. A close scrutiny would reveal duplicate functions and identical resource requirements, as well as supply-oriented and overlapping programmes.

1. The Sri Lanka Institute for Advanced Technical Education (SLIATE) 36. The Sri Lanka Institute for Advanced technical Education (SLIATE) has eighteen (eleven independent and seven attached) Advanced Technical Institutes (ATIs) located all over the country, which institutions had a total enrolment of 6,559 in 2002, mostly in business studies. The total pass-out in 2002 was 385, which is relatively low for the size of resource investment. The dropout rate for the same year was about 25.4%, which was relatively high. The SLIATE was established as a corporate body (Act No. 29 of 1995) with the following objectives: (i) to conduct Higher National Diploma (HND) and National Diploma (ND) courses and any other technical courses as may be determined by the Minister, from time to time; (ii) to plan and coordinate technical education; (iii) to apportion to the ATIs the funds voted by Parliament and to control expenditures by each such ATI; (iv) to maintain academic and training standards in the ATIs; (v) to regulate the administration of ATIs; (vi) to regulate the admission of students in

Appendix 6 128

each ATI; and (vii) to exercise, perform and discharge such powers, duties and functions as are conferred or imposed on or assigned to the Institute by or under this Act. 37. The administration, management and control of the affairs of the SLIATE are vested on the Governing Council comprising fifteen members representing mostly government line agencies, professional bodies, the federation of chambers of commerce and industry, and persons of recognized competence and eminence in the relevant areas of studies. Every member of the Council holds office for a period of three years, except the ex-officio members, who shall hold office as long as they hold their government posts by virtue of which they are members of the Council. 38. The Director-General serves as the principal executive and academic officer of the SLIATE under the general direction of its Governing Council and is appointed by the Minister with five-year tenure of office. 39. The SLIATE exercises the following academic powers as vested by law: (i) to recommend to the Minister the policy on Advanced Technical Education; (ii) to design, review and revise curricula of relevant courses of study; (iii) to initiate, promote, conduct and coordinate research, surveys and investigations in relation to any aspect of the development of Advanced Technical Education; (iv) to evaluate student performance; (v) to conduct examinations and assess student performance; (vi) to confer diplomas and other academic distinctions in conformity with the by-laws enacted for the purpose; and (vii) to determine, from time to time, in consultation with the governing authority of each ATI, the total number of students to be admitted annually by each institution and the apportionment of that number to the different courses of study. 40. The vision of SLIATE is to become the centre of excellence in technological education in Sri Lanka. Its stated mission is: “Education, training and certification of competent technological personnel with healthy attitudes for national development.“

2. The Department of Technical Education and Training (DTET) 41. The Department of Technical Education and Training (DTET) have thirty-seven technical colleges (TCs) under its direct supervision and control with a total enrolment of 17,850 in 2002 while dropout averaged to 4,431 or about 25% for the last five years. These TCs are located in strategic parts of the country, providing training for crafts-level workers. DTET is part of the long evolution of technical education and training in Sri Lanka, which dates back to 1893 when the first technical school was established (now the Sri Lankan Technical College - Maradana). In addition, DTET has gone through various institutional arrangements, more than any of the other line agencies. At the outset, it was established as the Technical Education Division (TED) under the Ministry of Higher Education (MOHE) through an ADB loan project for technical education. In 1994, it was elevated to the level of a department based on a decision made by the Cabinet of Ministers on 3 March 1993. It was later transferred to the Ministry of Labor and Vocational Training (MOLVT) where it remained until 1996. From 1997 to 2001, it came under the purview of the Ministry of Vocational Training and Rural Industries (MVTRI), which was later renamed as the Ministry of Technical Education and Vocational Training (MTEVT) and again changed to the Ministry of Human Resources Development (MHRD) in 2001. From 2002, the DTET came under the authority of a new ministry – the Ministry of Tertiary Education and Training (MTET). A plan is underway to convert DTET into a statutory body.

Appendix 6 129

42. The objectives of DTET are: (i) to offer facilities of technical education and training to both school-leavers and employees in relation to national needs and priorities; (ii) to cater to human resources needs demanded by the economic development of the country; (iii) to give high quality technical and technological education to those students who miss a university education, but are qualified for higher education; (iv) to create employment opportunities by providing training for fruitful, economic avenues; (v) to reduce restlessness in society by appropriate human resource development through technical education and training; (vi) to provide competencies leading to self-employment; and (vii) to direct the youth population to a prosperous future. 43. The Director-General is the overall head of the department comprising a network of thirty-seven technical colleges distributed throughout the country. DTET does not have a governing body for its administration, management and control of its affairs similar to autonomous bodies like NITESL and SLIATE. 44. DTET’s vision is to be a demand-driven, cost-efficient centre of excellence in creating world-class quality and technically competent personnel through the programmes and activities of the technical college network and in meeting the changing socio-economic needs of the country. Its mission statement is: 45. To strive to emerge as a forefront sustainable organization in managing training programmes of quality and relevance promoting and facilitating continuous learning, work ethics and values and working in partnership with industry, business and other organizations through various strategies to cater to changing socio-economic needs of the country.

3. The Vocational Training Authority (VTA) 46. The Vocational Training Authority (VTA) operates 230 training centers (twelve special/national, fourteen district and 204 rural) nation-wide with a total student population of 25,290 and dropout rate of 18.33 % in 2002. It was set up under the provisions of the Vocational Training Authority of Sri Lanka Act No. 12 of 1995. Under this mandate, it assumed jurisdiction over the Manpower Division and the Foreman Training Institute of the Department of Labor. The Manpower Division was an offshoot of the Vocational Training Unit, established in the early part of 1950 and which was the earliest attempt by the government to make vocational training more accessible to the rural and depressed areas of the country. Specifically, the mandated functions of VTA are: (i) the formulation and provision of training for the youth, practicing craftsmen and others; (ii) conduct of national trade tests and examinations and issuance of national certificates; (iii) conduct of research and development work in vocational training: (iv) offering of career guidance and counseling to those who have completed their training; and (v) coordination and facilitation of the training of trainers. 47. As a statutory body, the Authority has twelve members representing various sectors and ministries, among others, the private sector, youth affairs, education, industrial development, finance and labour. The Minister appoints the Chairman, who serves as the Chief Executive Officer of the Authority. 48. The vision of VTA is to be an organization that positively contributes to the socio-economic development of Sri Lanka by making a substantial proportion of its youth acquires the skills needed by the country to gain a competitive edge in the global environment. Briefly stated, its mission reads: Provision of primary to higher-level productive and employable skills training to unemployed youth for socio-economic development of the country.

Appendix 6 130

4. The National Apprentice and Industrial Training Authority (NAITA)

49. The National Apprentice and Industrial Training Authority (NAITA) conducts training in forty-nine training centers (four national and forty-five small) with a total enrolment of 16,335 and dropout rate of 29% in 2002. The Authority is a corporate body established under the TVEC provisions (Part II, Act No. 20 of 1990 as amended by Act No. 50 of 1999) and is the successor to the National Apprenticeship Board (NAB), which was incorporated under the National Apprenticeship Act No. 49 of 1971. The Authority has the following objectives: (i) planning, organizing and providing training; (ii) specifying standards in relation to vocational training; (iii) conducting National Trade Tests; (iv) conducting research and development in vocational training; (v) holding of competitions to promote the development of various skills; (vi) developing the training capacities of establishments and other institutions providing vocational training; (vii) advising the TVEC in regard to vocational training; and (viii) linking up with institutions in Sri Lanka and abroad that have similar objectives and equating and/or validating certificates, diplomas and degrees in allied subjects and courses. 50. The Authority is governed by a Board of Management, which consists of not more than fifteen members representing government institutions, trade unions, commerce and industry. The Minister appoints all members of the Authority, except the ex-officio members, for a period of four years. The Chairman of the Authority serves as the Chief Executive Officer. The powers that the Authority exercises are: (i) conducting National Trade Tests in those fields that have been approved by the Minister; (ii) training and control of training of instructors with respect to vocational training; (iii) providing in-plant training for all tertiary level educational institutes; (iv) preparing training schemes for in-plant training; (v) implementing such measures as approved by the Minister for the development of the training capacity of establishments; (vi) establishing and managing, with approval of the Minister, any institute or center for vocational training; (vii) advising the Minister in any matter when so directed by the Minister; (viii) determining different categories of trainees including apprentices; and (ix) doing all other things that, in the opinion of the Authority, are necessary to facilitate the proper carrying out of its objectives or the performance of its duties. D. Other Ministries, Statutory Bodies and Government Agencies in TEVT Provision 51. The distribution of other public TEVT providers and operators are: 379 statutory bodies, 209 government institutions, and 21 special institutions. A number of ministries are involved in TEVT, either as part of their mandated functions or as an objective to serve their respective sectors. The Ceylon-German Technical Training Institute (CGTTI) and the Sri Lanka German Railway Training Institute (SLGRTI) constitute the training arms of the Ministry of Transport to produce trained manpower for the transport industry. The National Youth Services Council (NYSC) with the Ministry of Sports and Youth Affairs has a Training Division for the provision of vocational training to school drop-outs to ensure the full development of the youth. Other ministries that have training functions are the Ministries of Industry, Health, Science and Technology, Agriculture, and Employment and Labour. The overlap of mandates and the fragmentation of resources are almost as pervasive as the inadequacy of equipment and the supply-driven focus of their activities. E. Private TEVT Provision: Structures and Quality Control 52. There is a growing number of private training providers offering TEVT courses related to information technology. They award an assortment of certificates and diplomas with no

Appendix 6 131

assurance of quality or national recognition. There appears to be a tremendous variation in training quality, from outstanding to abysmal. This may compound the unemployment situation and discourage the youth from pursuing TEVT programmes. By law, the provision of TEVT by the private sector and by non-governmental organizations requires registration, accreditation and approval by the government through the TVEC. So far, about 350 private TEVT institutions are registered with the TVEC. There are wide gaps in the enforcement of the present system, which need to be filled in before consistent training quality becomes a reality. There are no professional associations such as private accrediting bodies for quality control. Neither is there any peer or professional evaluation of institutions and programmes. This situation poses some difficulties starting from determining the supply capacity of the private sector for TEVT planning and policy formulation. F. Non-Government TEVT Providers: Role and Strategies 53. There are a considerable number of international non-government organizations (INGOs) and non-government organizations (NGOs) operating in the country, only 128 of which are registered with TVEC. Training is carried out mostly to support more central organizational mandates and core programmes such as farming, micro-enterprise development or basic crafts skills. On occasion, these organizations request that existing TEVT providers collaborate with them. G. Standards Setting, Accreditation, and Quality Assurance 54. By law, the responsibility of setting up the National Vocational Qualification (NVQ) framework, quality assurance and accreditation systems rests on TVEC. NVQ is a national recognition system of a qualification such as a National Certificate in Technology (NCT) and a Higher National Diploma in Engineering (HNDE). NVQs are qualifications about work, which are based on standards of competence set by industry through established standard-setters. Each NVQ is made up of a number of units, which are competency-based with agreed-upon standards to be met. A certificate of competence – an NVQ – is dependent on quality assurance in terms of the quality of the standards (quality specifications) and the quality of the assessment (conformance quality) related to these standards. The quality assurance (QA) system focuses on the maintenance of the agreed upon quality standards. It includes all activities that are undertaken to ensure that business is carried out efficiently and effectively through a quality management system (QMS). Accreditation is a process of checking whether an organization is capable of assuring its own quality and sharing responsibility for the parts of the NVQ framework where it wants to award a certificate or a diploma. 55. The systems have not taken off, except for the initial registration of some TEVT providers. There is a lack of expertise and infrastructure required to develop and implement the systems. The lack of the capacity to develop and validate existing training standards can be one of the drawbacks in sustaining a relevant, cohesive and effective TEVT system. Presently, there is a big confusion arising from the number and variety of prescribed training standards used by both public and private TEVT providers which include, but are not limited to, those from the City and Guilds of London, Business and Technical Education Council (BTEC) of UK, the Dual Training System of Germany, the Technical and Further Education (TAFE) System of Australia and the Competency-Based Training System which is supported by the International Labor Organization (ILO). The shift to competency-based training is the latest addition to the country’s existing sets of training standards.

Appendix 6 132

56. The on-going ADB loan assistance package to the Skills Development Project (SDP) has as one of its project components the development of an NVQ framework, quality assurance and accreditation systems. At this stage, only the conceptual framework of the NVQ and the pilot testing for quality assurance in twenty-five project institutions has been done. The full operation of an accreditation system may not be realized within the life of the project. Table A6.6 presents the proposed NVQ, which is being worked out by the project consultants for review by the concerned authorities.

Table A6.6: Proposed National Qualifications

Level Equivalent National Certificate 1 Semi-skilled National Certificate 2 Semi-skilled National Certificate 3 Craftsman/skilled National Certificate 4 Craftsman/skilled National Diploma 5 Technician National Diploma 6 Technician National Diploma 7 (Bachelor’s Degree)

Technologist

57. There are long-term benefits in benchmarking training standards to internationally recognized best practices for economies of scale in curriculum design and materials development. Moreover, the forces of globalization dictate a reality that skills development is no longer only exclusively for national needs but also for a competitive world-class workforce. There is a sense of urgency to set up training standards for the technician education and training system in order to develop higher-level technical skills. This should consider available materials from other countries, validating them in partnership with the industrial sector that requires the particular skills training. 58. A national quality awards system for the recognition of high performing TEVT institutions and for the promotion of TEVT is not in place. There is a need to re-orient the institutional culture towards efficiency, productivity, quality and excellence. This award could be patterned after the Malcolm Baldrige National Quality Award, which can be given to institutions as well as individuals. As a strategic objective, TVEC should aim to acquire ISO 9001 accreditation for other TEVT organizations to emulate and to benchmark their performance.

Appendix 6 133

Figure A6.1 Flow Chart of Education and Training Sys

CE O-L

gree

Grades 8/9

GCE A-L

NAITA: ATI

VTA

DTET: TC

C/D/BD

Private Sector Providers

CGTTI C

CGRTI

DTET: TC

VTA

OUSL

C

loma

Membership

Postgraduate Institutes

NCC National Craft Certificate T Technology N National Certificate E Engineering

C

NC/D

C/DT/BD

D/NDES/ E/BD/MD

Professional Bodies

hD

niversities BD

C/D

NC

CC/NCC

NDT

NDES

HNDE

NAITA: TTI

D VTA

SLIATE: ATI

C/DT/BD

NC/NHND

C Certificate ES Engineering Sciences D Diploma ND National Diploma Under Ministry of TE&T HND Higher National Diploma BD Bachelor’s Degree Other Institutions shown are MD Master’s Degree not under that Ministry

KEY

G

tems in Sri Lanka

De

Dip

OUSL

BD/MD/P

U

ITUM

Appendix 6 134

Figure A6.2

Ministry of Tertiary Education and Training

Secretary

Addl. Secretary Plan & Dev.

Addl. Secretary Hu. Res. Dev.

Addl. Secretary Higher Education

Snr. Asst. Secretary Higher Education

Chief Accountant Snr. Asst. Secretary Admin.

Snr. Asst. Secretary Tech. Edu/Voc. Train.

Director Planning

Asst. Secretary Higher Education

Accountant Accountant Asst. Sec. Estab.

Asst. Sec. Admin.

Dy. Director Planning

UGC 13 Universities

Admin. Officer Admin. Officer Asst. Director

Planning Asst. Director

Planning

Acct. Asst. Acct. Asst. Chief Clerk Staff Asst.

Hon. Minister

DTET, TVEC, NAITA, NITESL, VTA, SLIATE, INGRIN & SDP

Appendix 7 135

UNIT COST OF TECHNICAL TRAINING 1. This computation of cost of technical education per student employs data from SLIATE for the fiscal year 2002. SLAITE has eleven regional centres offering variety of programs and the number of registered students in all 11 institutions totalled 4,479 in 2002. As shown in the table, the number of registered students varied from 103 in Ampara and Mattakuliya to 788 in Dehiwala. Institutions, which provided information technology, management, business and commence and secretarial studies usually catered to a large number of students compared with institutions, which focused primarily on technology studies. The breakdown of total expenditure, including depreciation, for 2002 by major categories is as follows. Direct Costs1 = SLRs57,443,890 Indirect Costs2 = SLRs8,938,416 Head Office Expenditure = SLRs40,344,772 Depreciation = SLRs29,266,727 Total = SLRs135,953,805 2. In 2002, SLIATE incurred a total of SLRs135.9 million to cover all its cost of providing programs on technical education. Of the total cost, 42% accounted by direct costs, 6.4% indirect costs, 29.6% head office administrative expenditure and 21.6% deprecation of plant, equipment and machinery. 3. With 4,479 registered students in all eleven institutions in 2002, the average expenditure per student works out to SLRs30,349. However, the overall average cost per student does not distinguish per student costs of technology related programs from per student costs of non-technology related programs. Most of the technology related programs incur higher costs since they use equipment and machinery and other teaching materials as teaching aids. As a result costs related to the head office administration as well as annual depreciation are higher in relation to technology related programs. However, costs data available from SLIATE cannot be separated by institutions to provide a per student cost of different programs offered by different institutions of SLIATE. 4. Using the available data from SLIATE, an estimate of per student cost of technical education has been developed and presented in the following table. This approach first separates direct and indirect costs by institutions, which are available from SLIATE. Direct cost per student by institution is then taken as the ratio of the sum of per student cost of all 11 institutions to allocate both head office expenditure and depreciation per student by institution. Although there are shortcomings of this approach, there is no other mechanism to calculate per student cost in the absence of disaggregated data on head office expenditure and depreciation. Both these categories are closely related to direct costs than to indirect costs. Using direct costs as a proxy, therefore, provides a reasonable alternative to allocate head office expenditure and depreciation per student and by institution. 1 Direct costs include costs that are directly related to technical education. These include salaries and wages of teaching staff, visiting lecture fees, examination and evaluation costs, maintenance costs of plant and machinery, costs of training activities, charges on telecommunication, electricity and water and costs of study tours, workshops and seminars. 2 Indirect costs include all other costs indirectly related to technical education such as support services, building and vehicle maintenance, security and janitorial services, and over time to administrative staff. Costs of telecommunication, electricity and water are divided between direct and indirect costs. The shares included under direct costs are 70% telecommunication and 50% electricity and water. The difference is included under indirect cost of the three expenditure items.

Appendix 7 136

Table A7.1: Computation of Per Student Cost by Institution

Institution

Registered Students

(No)

Direct Cost Per Student

Indirect Cost Per Student

Total Direct and

Indirect Cost Per Student

Head Office Expenditure Per Student

Depreciation Per Student

Average Cost Per Student

Labuduwa 154 28,473 11,123 39,596 19,998 14,487 74,081Naiwala 103 48,050 5,816 53,865 33,747 24,447 112,059Mattakuliya 463 19,059 4,521 23,579 13,386 9,697 46,662Ampara 103 60,456 7,398 67,854 42,460 30,759 141,074Dehiwala 788 10,734 1,500 12,234 7,539 5,561 25,234Badulla 213 20,041 3,438 23,479 14,076 10,197 47,751Galle 420 13,255 1,363 14,618 9,310 6,744 30,672Kandy 760 7,503 972 8,476 5,270 3,818 17,563Kurunegala 483 6,897 767 7,664 4,844 3,509 16,017Tricomalee 241 6,618 415 7,033 4,648 3,367 15,049Jaffna 751 5,507 101 5,608 3,868 2,802 12,277Average 4,479 12,825 1,996 14,821 14,467 10,480 39,768 5. As shown in Table A7.1, per student cost varies across 11 institutions. The highest per student cost in 2002 has been in Ampara with an estimate of SLRs141, 074 while the lowest cost of SLRs12,277 has been accounted by Jaffana. The overall average has been SLRs39,768 which is higher than the simple average of SLRs30,353 reported above. The higher average obtained from this calculation resulted from the aggregation of average per student cost related to direct and indirect costs with weighted average costs of head office expenditure and depreciation. 6. Among the institutions with high per student cost, Ampara and Naiwala clearly stand out. It appears that higher unit cost in both institutions has been largely influenced by low student registrations. In other words, both these institutions operate with very low utilization of existing facilities. The same situation exists in Labuduwa, which offers mostly IT related programs, where most of the new facilities remain underutilized due to low student registration. The estimate of average per student cost in Mattakuliya has been SLRs46,662 and it appears this figure under estimates to some extent the average per student cost. Mattakuliya has a large student population enrolled in various technical programs, but in comparison with other institutions it has limited facilities. 7. Out of the 11 institutions, six had estimates less than the overall average. These institutions mostly offer non-technical programs and therefore average per student costs is lower than other institutions. 8. Although it is difficult to suggest an estimate of per student cost in technology related studies due to serious limitations of existing data, it appears that about SLRs75,000 per student would be sufficient to provide a program in advanced technology by any institution with annual intake of 300 or about 600 students in any given year. It is also estimated, based on the currently available data, salaries and wages of teaching staff would account for 40% of this amount. Table A7.2 shows the computation of the unit cost of technician education.

Appendix 7 137 Table A7.2: Computation of Unit Cost (Per Student Cost) of Technician Education (Based on SLIATE Data for 2002)

Direct Costs Labuduwa Naiwala Mattakkuliya Ampara Dehiwala Badulla Galle Kandy Kurunegala Trinco Jaffana Salaries & Wages 3,544,545 4,254,430 6,898,873 5,748,682 5,904,635 3,228,175 3,948,935 4,121,557 1,799,655 950,000 2,953,604 Visiting Lecture Fees 117,141 181,525 318,245 64,157 1,201,361 581,146 1,159,237 1,120,514 1,290,762 514,083 1,023,570 Examination/Evaluation 105,226 145,035 255,895 72,830 490,827 107,230 209,134 165,185 100,450 87,780 114,227 Maintenance of Plant & Machinery 0 57,458 2,800 56,491 140,855 115,707 4,856 30,249 4,025 8,700 1,500 Consumable for Training Activities 106,654 60,984 5,583 35,855 873 2,282 53,840 Telecommunication 161,730 59,238 146,927 88,160 85,641 57,679 107,566 75,471 37,783 20,370 29,540 Electricity 308,689 171,118 551,604 179,058 183,970 78,531 76,690 92,804 41,431 9,750 11,253 Water 0 0 348,762 0 369,935 38,92142,138 37,143 0 4,350 1,900 Workshops/Seminars 40,933 0 99,466 0 29,845 1,200 0 29,220 0 0 0Study Tours 0 80,320 140,636 17,610 45,750 21,100 21,000 28,000 3,300 0 0Total Direct Costs 4,384,918 4,949,124 8,824,191 6,226,988 8,458,401 4,268,760 5,567,211 5,702,425 3,331,246 1,595,033 4,135,594 Indirect Costs Overtime & Holiday Payment 35,253 25,851 7,826 30,179 8,594 29,512 18,541 20,218 10,893 0 0 Domestic Traveling 35,673 37,010 12,416 20,897 16,313 20,784 21,501 20,223 0 15,000 0 Stationary and Office Requisites 101,897 65,228 151,818 49,177 93,581 56,774 41,209 59,621 29,888 0 11,000 Fuel and Lubricants 45,262 53,875 16,705 40,525 30,700 32,148 54,550 29,662 950 500 Uniforms 375 0 0 1,560 740 412 0 0 0 0 0Library Services 61,172 29,255 36,047 24,653 27,277 25,429 38,528 34,546 0 0 0 Telecommunication 69,313 25,388 62,969 37,783 36,703 24,720 46,100 32,345 16,193 8,730 12,660 Postal Charges 10,293 10,441 5,430 9,870 5,672 23,151 10,446 9,221 6,104 0 3,500 Electricity 308,689 171,118 551,604 179,058 183,970 78,531 76,690 92,804 41,431 9,750 11,253 Water 0 0 348,762 0 369,935 38,92142,138 37,143 0 4,350 1,900 Security & Other Services 953,531 136,315 843,010 287,563 353,386 372,325 196,009 383,240 228,248 0 0 Meetings 26,219 4,149 12,102 0 740 0 2,417 1,728 0 0 0 Functions Conventions 0 0 6,585 5,448 6,065 1,122 1,560 1,879 0 0 0 Vehicle Maintenance 31,918 30,573 15,614 59,896 18,787 17,830 23,001 5,596 36,649 0 0 Buildings and Structures 28,622 9,809 8,236 10,762 29,249 7,364 2,825 6,164Rents & Hire Charges 0 0 0 0 0 0 0 0 0 48,500 30,000 Traveling for Academic Staff 0 0 13,954 4,588 0 0 0 4,696 0 13,572 5,050Staff Training 4,700 Total Indirect Costs 1,712,917 599,011 2,093,077 761,958 1,181,712 732,239 572,297 739,086 370,356 99,902 75,863 Total Costs (Direct & Indirect) 6,097,835 5,548,135 10,917,268 6,988,946 9,640,113 5,000,999 6,139,508 6,441,510 3,701,601 1,694,935 4,211,456 Number Registered 154 103 463 103 788 213 420 760 483 241 751 Total Cost/ Student 39,596 53,865 23,579 67,854 12,234 23,479 14,618 8,476 7,664 7,033 5,608 Head Office cost /Student 19,998 33,747 13,386 42,460 7,539 14,076 9,310 5,270 4,842 4,648 3,868 Depreciation 14,487 24,447 9,697 30,759 5,461 10,197 6,744 3,818 3,509 3,367 2,802 Total Cost per Student 74,081 112,059 46,662 141,073 25,234 47,752 30,672 17,564 16,015 15,048 12,278

Appendix 8 138

PROBLEM TREE

Weak provision of in-industry training

Few providers of technical skills development

SLIATE, NAITA, ITUM, OU

Poor positions of facilities and staffing

Planning and management of TEVT geared for Supply

Supply orientation of the TEVT System

Public image inferior to Academic Path

Inadequate publicity and public information

Absence of skill standards of

international level

No functional accreditation and QA

system

Ineffective enforcement of TEVT

standards and regulations

Management not geared to social issues

and problems

Inadequate funding and incentive system

Weak private sector partnership No national network of

TEVT providers

Political, social and economic instability Lower productivity

Poor Matching of Skills

Inadequate Return on Investment

Investment not purposefully used

Added social problems and incidence of

poverty

Reduced Employment Opportunities

Student unrest

NATIONAL IMPACT

CONSEQUENT

IMPACTS

Critical Short-comings related to Relevance, Efficiency and Effectiveness of the TEVT System (in HIGHER LEVEL TECHNICAL SKILLS DEVELOPMENT [HLTSD])

Poor coordination and monitoring of the TVET

system

KEY SECTOR

PROBLEM

Paucity paths for Higher Technical Skills Development

DIFFERENT SECTOR

OUTPUTS Absence of employment

intervention Weak links to

secondary schools Poor co-ordination

Budgeting is not geared to reflect system needs

and performance system

Appendix 9 139

NATIONAL QUALIFICATIONS FRAMEWORK FOR SRI LANKA

Figure A9.1

NVQ 7

NVQ 6

NVQ 5

NVQ 4

NVQ 3

NVQ 2

NVQ 1

NVQ Level

Technological and Vocational Education and Training

World of Work

General Education

Bachelor of Science

(Conventional Universities)

Bachelor of Technology (Advanced Colleges of

Technology or Open University)

Associate Degrees (To be yet defined)

Diploma in Technology

(Colleges of Technology)

GCE (A-L)

(Secondary School)

National Certificates In a Technology or a Vocation

(Technical Colleges)

Foundation Certificates In a Technology or a Vocation (Vocational Training Centers)

GCE (O-L)

(Secondary School)

Below Year 11 of School

Source: Draft National Development Plan of TVEC, 2004

Appendix 10 140

PROJECT FRAMEWORK MATRIX

Design Summary Performance

Indicators Monitoring

Mechanisms Assumptions and

Risks Goal

The reduction of poverty, easing unemployment especially for unemployed youth, through enhancing labour and industrial productivity and competitiveness of the economy by establishing a demand-driven and public-private based TEVT system.

Political and socio-economic conditions remain stable Economy continues to create jobs Government investment in Education managed effectively

Project Purpose A unified, demand driven, accessible, private-public partnership based and sustainable TEVT system which produces globally-competitive workforce.

Government and private sector partnership remain strong

Project Components/Outputs Component 1: An operational Human Resource Endowment Fund spearheading change in TEVT into a private–public partnership based, sustainable system Output 1.1: Human Resource Endowment Fund Council and Administrative Service

Major Activities 1.1.1:Establish the HREF Council 1.1.2:Contract to an international consulting firm the administration of the HREF Fund 1.1.3:Set up HAS offices and select two support staff

Council members appointed Council meetings Sub-committee members appointed

Contract signed with an international consulting firm

Office set up and two support staff hired

Copy of the HREF Act

List of HREF Council members Minutes of meetings Invitations to bid, copies of proposals, and signed contract Copies of contracts

HREF legislation enacted in parliament Members are knowledgeable and add value to Council

Transparency in the bidding process Timely recruitment of consultant Availability of office space and qualified staff

Appendix 10 141

Design Summary

Performance Indicators

Monitoring Mechanisms

Assumptions and Risks

1.1.4:Organize NTAS, CP, TPP, HRIF implementation structures and processes Output 1. 2: National Technology Awards Scheme

Major Activities 1.2.1:Contract to a management agency/bank the administration of the loan component of HREF activities 1.2.2:Establish a National Technology Awards Scheme Output 1. 3: Corporate Programme, In–Industry Technician–Graduates Training

Major Activities 1.3.1:Develop mechanism for the management of the programme and prepare In-Industry Technician-Graduates Training Manual of Procedures, learning packages and mechanisms to evaluate training outcomes 1.3.2:Organize workshops to train and assist potential bidders in project design, proposal development and report preparation 1.3.3:Prepare and sign contracts, monitor and evaluate implementation progress

NTAS, CP, TPP, HRIF structures and processes established

Loan management bank selected and operational

Yearly NTA of 3500 for public recipients and 1000 for private recipients up to Years 4 of the loan

In-Industry Technician-Graduates Training Manual of Procedures circulated; learning packages developed and validated

Workshop completed and proposals submitted

Training underway in target technologies

List of staff, Staff resumes, Organizational chart, Copies of recruitment procedures, ads, TORs, manuals of procedures, Minutes of Meetings PIU Reports Ads in newspapers of invitations to bid, copies of proposals, and signed contract

List of Awardees Newspaper articles on the Awards programme Progress Reports Audit Reports Copy of Manual of Procedures Progress Reports

Workshop program, list of participants, workshop summary

Copies of proposals and contracts List of trainees

Availability of qualified staff Transparency in recruitment

Availability of suitable management agency/Bank

Poverty and social needs accommodated

Commitment of awardees to finish education and find jobs Corporate sector will use the funding mechanism

Assistance to potential bidders enhance participation

Monitoring and evaluation ensure quality

Appendix 10 142

Design Summary

Performance Indicators

Monitoring Mechanisms

Assumptions and Risks

Output 1.4: Corporate Programme, Employee Upgrading

Major Activities 1.4.1:Develop mechanism for the management of the programme and prepare Employee Upgrading Manual of Procedures 1.4.2:Organize workshop to train and assist potential bidders in project design, proposal development and report preparation 1.4.3:Prepare and sign contracts, monitor and evaluate implementation progress Output 1.5: Corporate Programme, Training Partnerships

Major Activities 1.5.1:Develop mechanism for the management of the programme and prepare Training Partnerships Manual of Procedures 1.5.2:Organize workshop to train and assist potential bidders in project design, proposal development and report preparation 1.5.3:Prepare and sign contracts, monitor and evaluate implementation progress Output 1.6: TEVT Provider Expansion and Quality Enhancement Programme

Major Activities 1.6.1:Develop mechanism for the management of the programme and prepare TEVT Provider

400 men and women completed training

Employee Upgrading Manual of Procedures circulated

Workshop completed and proposals submitted

800 grants made to eligible employers

Training Partnerships Manual of Procedures circulated Workshop completed and proposals submitted

10 loan /grants of between Rs 10m and Rs 100m allocated

TEVT Provider Expansion and Quality Enhancement

Progress and audit reports

Copy of Manual of Procedures Progress reports

Workshop program, list of participants, workshop summary

Copies of proposals and contracts

Copy of Manual of Procedures Progress reports

Workshop programme, list of participants and summary

Copies of proposals and contracts List of participating partners Audit and Progress reports

Copy of Manual of Procedures Progress Reports

Trained workforce continue to be challenged and are given incentives

Assistance to potential bidders enhances participation Monitoring and evaluation to ensure quality Public and private sectors work well in partnership Assistance to potential bidders enhance participation Monitoring and evaluation ensure quality The identified area of expansion and enhancement

Appendix 10 143

Design Summary

Performance Indicators

Monitoring Mechanisms

Assumptions and Risks

Expansion and Quality Enhancement Manual of Procedures 1.6.2:Organize workshop to train and assist potential bidders in project design, proposal development and report preparation 1.6.3:Prepare and sign contracts, monitor and evaluate implementation progress

Manual of Procedures circulated

Workshop completed and proposals submitted

75 loans/grants awarded Number of Private TEVT providers increased in higher level technical programs and new technologies

Workshop programme, list of participants and summary

Copies of proposals and contracts Progress reports Audit reports On-site visits

continues to grow. Assistance to potential bidders enhance participation Monitoring and evaluation ensure quality

Component 2: A strengthened MTET supporting a demand driven, employer responsive, public –private partnership based, TEVT system Output 2.1: Performance Based Institutional Finance System

Major Activities 2.1.1:Develop and establish a performance based institutional financing system and supportive accounting and auditing systems 2.1.2:Train senior managers in performance based institutional finance system Output 2.2: EMIS System

Major Activities

2.2.1:Set up EMIS system and publish services 2.2.2:Train staff to use system and data

Performance based institutional financial system developed

Senior Finance Managers trained

Performance based budget system implemented

EMIS operational

EMIS trained staff in

place

Progress and audit reports Training summary and copies of materials Copies of budget

EMIS Log Audit and progress reports Testimonies from users Progress reports

Institutional culture supports performance based mechanism Transition is effectively managed allowing space and time for adjustment to change

Timely submission of needed data Qualified staff recruited to manage the system

Appendix 10 144

Design Summary

Performance Indicators

Monitoring Mechanisms

Assumptions and Risks

Output 2.3: Enhanced TVEC Capability

Major Activities

2.3.1: Set up industry sectoral councils 2.3.2: Establish technician programme standards 2.3.3: Validate programme standards with industry sectoral councils 2.3.4:Approve audit mechanism for compliance to standards 2.3.5:Train audit teams Output 2.4: TEVT Quality Assurance

Major Activities 2.4.1: Organize a voluntary national association of TEVT providers (NATP) and assist members in compliance 2.4.2: Develop institution registration and programme accreditation system with accompanying manuals 2.4.3: Train audit teams with industry participation Output 2.5: Social Marketing and Career Guidance

Major Activities

Number of operational sectoral councils

Technician standards developed and accepted by TVEC

Program standards validated by industry

Audit mechanism

Completed TVEC teams conducting audits of NATP and institutions

Number of NATP members meeting registration and accreditation standards

Quality of institutions and programs evaluated using criteria such as employer/learner satisfaction, cost effectiveness, participation of women and the poor

Trained teams audit institutions and programs

Marketing strategy developed and

List of sectoral council members and minutes of meetings Copies of published standards Feedback from employers Progress reports Manual of Procedures Audit reports NATP Membership List and Minutes of Meetings

Copy of manuals of procedures for institution registration and program accreditation

Training summary, list of members of audit teams trained Audit reports and list of institutions and programs audited

Copy of Strategy Progress reports

Standards are achievable Industry commit to sectoral councils and contribute to development of standards

Timely recruitment of consultant

Socio-cultural factors support voluntary accreditation and quality monitoring Openness of institutions to audit TVEC and NATP work in bringing institutions to comply with standards A marketing strategy supported

Appendix 10 145

Design Summary

Performance Indicators

Monitoring Mechanisms

Assumptions and Risks

2.5.1:Develop and implement marketing strategy with special focus on the poor, women and ethnic minorities 2.5.2:Develop partnership with other centers to deliver career counseling to unemployed youth 2.5.3:Design public awareness campaign to change perception of TEVT 2.5.4: Identify industry partners in campaigns

implemented Increase in number of students seeking admission to TEVT

Existing partnership with centers delivering career counseling

Increase in number of unemployed youth enrolling in skills upgrading

Industry partners actively involved in campaign

Copies of Agreement with centers and list of clients assisted in the centers PIU Reports

List of industry partners

by counseling ensures complementary action to TEVT

Component 3: Institutions become demand driven and partnership based with Colleges of Technology responding to the needs of industry for technicians Output 3.1 Governance

Major Activities3.1.1:Draft legislation or amendment of existing Acts for the legal status, operations and sustainability of COTs 3.1.2:Establish Boards of Management (BOMs)

Legislation or amendments to existing Acts drafted and enacted

10 BOMs constituted based on inclusiveness with representatives from industry and private sector employers. BOMs operational

Copy of draft/enacted legislation

Profiles of Board members appointed

Minutes of meetings Progress reports Training summary

Government will support the establishment of COTs vesting in the governance such powers on financial autonomy, public-private partnerships, accountability and empowerment of people in the organization towards self-reliance and sustainability

The private sector will assume leadership and active participation in BOMs Timely appointment

Appendix 10 146

Design Summary

Performance Indicators

Monitoring Mechanisms

Assumptions and Risks

3.1.3:Select and train CEOs of COTs Output 3.2: Strategic Planning

Major Activities

3.2.1:Orient Board Chairs, CEOs and key staff in strategic planning 3.2.2:Develop and implement strategic plans and business plans for COTs 3.2.3:Train staff to implement plan Output 3.3: Financial Planning and Management

Major Activities 3.3.1:Train staff in performance based financial planning and management 3.3.2:Train staff in ADB procurement and financial management requirements 3.3.3: To develop and institutionalize systems and procedures for performance based financial planning and management Output 3.4: Entrepreneurial Management

Major Activities 3.4.1:Develop a mechanism and reward system to encourage entrepreneurial individuals and institutions 3.4.2:Train BOMs, CEOs and key staff in entrepreneurial leadership and management

10 CEOs of COTs selected, trained and appointed

Training implemented

Orientation on strategic planning held and internalized

Strategic plan developed and implemented

Staff training programmes conducted

Training workshops organized and training materials prepared

Systems and procedures for performance based financing system operational

Improved quality of COTs proposal submission to HREF funded programmes

Number of entrepreneurial programmes carried out

and profiles of CEOs

PIU Report

Orientation programme

Copies of strategic plans

Summary of training evaluation Summary of training evaluation and participants' list Systems forms and financial reports

Submitted proposals

Copies of proposals Number of new programs and contracts Training summary Audit reports

of qualified CEOs Leaders in institutions think strategically. Motivation of trained staff to stay in institution

TEVT institutional culture supports entrepreneurial pursuits

Entrepreneurial staff available

Appendix 10 147

Design Summary

Performance Indicators

Monitoring Mechanisms

Assumptions and Risks

3.4.3:Establish separate revenue accounts

Output 3.5: Curriculum

Major Activities 3.5.1:Develop curriculum to TVEC approved standards 3.5.2:Establish sectoral council curriculum validation system 3.5.3:Train staff in new curriculum 3.5.4: Develop learning packages and learning resource materials for in-industry training programmes and skills upgrading through outsourcing arrangements Output 3.6: Equipment

Major Activities 3.6.1:Review of equipment needs and prepare equipment list for HRIF award winning institutions 3.6.2:Develop procurement plan and repair and maintenance procedures 3.6.3:Train staff to use equipment Output 3.7: Renovations

Major Activities 3.7.1:Develop a physical facilities plan for HRIF award winning institutions 3.7.2:Identify required renovation 3.7.3:Develop financing and renovation schedule Output 3.8: Staff Training

Major Activities3.8.1:Conduct training needs assessment in HRIF winning institutions 3.8.2:Develop a staff development plan 3.8.3:Implement staff development plan based on priorities

Accounts opened New curriculum meet TVEC standards

New curriculum validated by sectoral councils Trained staff implementing new curriculum Materials developed

Equipment reviewed by employers Procurement plan and manual for repair and maintenance developed Staff competent to operate and maintain equipment

Physical facilities/financing plan developed Renovations completed

Staff development plan completed

Priority areas of training completed Number of trained staff

Curriculum materials Sectoral councils minutes of meetings Training materials

Procurement specifications

Copy of manual of procedures

Training manuals

Copy of the physical facilities plan, financing and renovation schedule

Staff appraisal report Copies of staff development plan Training evaluation feedback Progress reports

Economy continues to require new and higher level skills

Appropriate equipment procured. Availability of competent staff

Availability of skills needed for the renovation

Staff trained continue to contribute to institution's improvement

Appendix 10 148

Design Summary

Performance Indicators

Monitoring Mechanisms

Assumptions and Risks

Output 3.9: Part Time Learning

Major Activities3.9.1:Train CEOs/Part-time learning coordinators in developing market responsive part-time education programmes 3.9.2:Promote programmes 3.9.3:Train staff to develop learning materials and implement programmes 3.9.4:Conduct and evaluate programmes offered

Number of part time programmes offered Number of staff trained

Number of participants in programmes Variety of delivery modes and associated materials developed

Programme evaluation satisfactory

Progress reports

Student feedback

Copies of published offerings PIU Report

Economy will support institutionalization of part time learning

Inputs: A. Base Cost

1.Consultants - Remuneration

International Local

2. Civil Works 3. Equipment, Furniture

and Vehicles 4. Industry Assistance 5.Training Support

6. Institutional Support 7. Staff Development

8. General Administration Sub-total (A) B. Contingencies

1.Inflation Sub-total (B)

C. Interest Charges Total (A+B+C)

($’000)

1,500 618 3,000 19,250

14,000 21,750 2,390 540 2,170 65,218

7,083 7,083

1,396

73,697

Appendix 11 149

PROPOSED HUMAN RESOURCE ENDOWMENT FUND SCHEMES

Selected GCE A-Level Graduates who have offered National Technical Awards to take Industrial Technician Courses

HREF purchases training places for GCE A- Level and GCE O-Level Graduates in target technologies wherein there is an urgent but limited need

Eligible Companies receive grants to finance in-industry training of employees to improve productivity.

National Technical Awards Scheme

Corporate Programme Training Partnerships Scheme

Corporate Programme In-Industry Employee Training Scheme

Corporate Programme In-Industry Graduate Training Scheme

Social Marketing Scheme to improve TEVT image and bring in more top level applicants

Industry Sectors receive grants/loans to take over management and operation of an existing technical facility to meet the needs of that industry sector for higher-level technology technicians and other staff

TEVT Providers Expansion and Upgrading Scheme

NATP Quality Assurance Scheme overseen by TVEC

TEVT Providers receive loans/grants to improve facilities, equipment and curricula to meet international standards in higher technology programmes in target areas identified by TVEC

Appendix 12 150

VISION OF THE COLLEGES OF TECHNOLOGY (COTs) A. The Role of the Industrial Technician 1. The higher-level technical person, referred to as Industrial Technician, will be able to transform a design or complete project statement as given by the engineer/project designer/product designer into a set of tasks for implementation. Specifically she/he will:

(i) Analyse and disaggregate a complex industrial task into a connected set of unit operations/activities

(ii) Identify equipment and the layout of the production/service process as given in designed and specified form by the designer/engineer

(iii) Lay out, installation and commissioning of equipment/plant and infrastructure as specified

(iv) Install/implement specified arrangements/devices for process monitoring, quality control

(v) Report progress, review, and initiate continuous improvement of process/plant (vi) Identify and arrange for supplies and consumables for the production/process line (vii) Receive materials and do quality checks (viii) Store materials, consumables and products, and monitor consumption (ix) Sales and after-sales service delivery (x) Receive and make use of customer feedback (xi) Participate in and contribute to knowledge management (xii) Maintain equipment and infrastructure (xiii) Preset, adjust, repair, modify and improve equipment and infrastructure (xiv) Ensure safety in the workplace, give first-aid and call for emergency services

when necessary (xv) Ensure Trouble Free Operation of plant and facilities.

2. The product or service, the production /service facility and plant/factory layout will be designed by the production/plant engineer, and will not be within the scope of the Industrial Technician. 3. The Industrial Technician is in the associate professional/supervisory category, and will function under the managerial control of engineers and managers.

4. The givens to the Industrial Technician are detail drawings, specifications, testing/quality monitoring and criteria, handbooks, codes, manuals, and equipment and facilities as found in a workplace. There will also be a pool of personnel from which persons can be selected and detailed and fitted into tasks. She/he will be conversant with:

(i) Industrial norms, conventions and standards; (ii) Methods of communications in the form of technical/engineering drawings and

sketches, and communicating in spoken, paper-based and electronic forms; (iii) Fundamentals relating to technical specifications of products, services, processes

equipment and systems; (iv) Procedures for specifying, selecting, installing, commissioning, cleaning,

servicing, maintaining, testing, adjusting, repairing, provision of equipment and spares, overhauling, modifying/adapting, and scrapping of machinery.

(v) Procedures for selecting, deploying, orienting, detailing, training, testing, and checking, reviewing and assessing performance of personnel;

Appendix 12 151

(vi) Procedures for selecting, testing storing and use of materials and consumables; (vii) Procedures for measuring, testing, and checking items of work and jobs; (viii) Relevant principles and practices of industrial psychology, sociology, productivity

improvement, ethics and law, work study, ergonomics, statistical methods, quality control and management to the workplace;

(ix) Procedures and data for estimating cost of operations and items in relation to work in hand;

(x) Procedures and practices to organize and arrange the workplace and to give related instructions to others;

(xi) Procedures/practices to locate, access, acquire, store, learn and apply new items of information and knowledge related to work and worker development.

5. It would not be possible to include all the required knowledge and skills as indicated above into a two-year course, but as a student she/he could be introduced to each area and given the basic terminology and skills so that there is an initial sensitization and the ability to find addition items as and when necessary. she/he will be equipped to function adequately in the industrial environment during the first two years of employment in the chosen area. 6. The Industrial Technician and the technologist can be in a team that does research and development in creating products/services, processes and equipment. The Industrial Technician fits into an organization as shown below schematically.

Figure A12.1: Diagram showing the Organizational Context of the Industrial Technician

Operation Cleaning Maintenance Adjustment

Service

Repair

Supervise

A

Organize Plan

Test

Train

Re-train

Install

Select

Set/Adjust

Level of Craftsman and Operative

ssign

s

D

s

Operational, Supervisory and Executive functions of the Industrial Technician, and requiring higher-level technical skills

Top Manager

ivision/Section Managers

Senior Executive

Appendix 12 152

1. Curriculum Requirements 7. The Diplomate in Industrial Technology will usually be in a specific industry that will require a particular mix of knowledge and skills. These have to be developed in the student in addition to a set of generic knowledge and skill that is common to all technicians. Therefore a course could be arranged into a combination of modules. All the students will select a number of these and they will choose others in keeping with their specialization. 8. It is also feasible to deliver sections of lesson materials through self-instructional modules and computer-based instruction so that the student time in the institute could be used more efficiently for practical tasks and projects.

2. Links with the Industry 9. Since the institution is operated and managed through a public-private partnership, there could be significant industrial exposure during the course that can enrich the lessons and make the theory learning more meaningful and relevant. To facilitate the interspersing the industrial exposure appropriately, persons from industry can be designated as adjunct staff, and assigned liaising and industry-based guiding, instructing and assessing functions. 10. The six-month industrial training will be assigned through a selection process that includes a review of in-course assessments and a placement interview by a panel consisting of institution staff and industry representatives. This arrangement will be to facilitate absorption of the students by industry as employees.

3. Institution-Industry Partnership 11. A TEVT institution will have partnerships with one or more industry or industry clusters. An industry or industry cluster may be a partner to more than one institute. The objectives of a partnership are:

(i) To bring about a greater understanding in teachers/instructors and managers of industry of the existence of valid and distinct knowledge and skills clusters respectively within the TEVT institutions and the industrial organizations.

(ii) To enhance the relevance of institution-based TEVT in relation to practice; (iii) Making available resources and expertise available in industry to institutions in

order to improve the quality and relevance of formal TEVT; (iv) Making the resources and expertise available in the TEVT institutions to industrial

organizations to improve the technological-base of the industries and businesses, and to assist in product and process development;

(v) To assist in solving problems of partnering industrial organizations through collaboration and sharing of resources for industry related research, development and standardization.

(vi) To provide funds and material support for the improvement and expansion of a partner institution.

12. In existing arrangements of industry and TEVT institutions the above processes are minimal and happen if at all on an informal basis. The TEVT educators/trainers and the industry based engineers and technologists do regular meetings and exchanging of views focused on improvement of TEVT.

Appendix 12 153

4. Other Activities 13. In addition to the formal Diploma programme the institution will also conduct short duration programmes to cater to those in employment. These will programmes will be on the basis of full cost recovery. 14. Services will be provided to the industry through testing, consultancy, training, and facilitation of technology transfer.

5. Governance 15. A Board of Management that has a strong representation of the private-sector partners will govern the institution. The Chairman of the Board will be a person from the private sector. The CEO will be a TEVT educator/trainer appointed on the basis of his track record, experience and qualifications.

6. Funding 16. The institution will have its own fund into which it can credit the contributions from the sate, fees, earnings, grants, donations, and other receivables. 17. The sate will provide funds on a per student basis and corresponding to the number of students admitted to each course. Financial provisions for maintenance and upgrading of facilities will have to be negotiated on the basis of a strategic plan from a component of the HREF set apart for institutional development.

Appendix 13 154

PROJECT DESIGN SUMMARY

MTET-TVEC 2.1 Performance Based Financing of Institutions 2.2 Technician Standards 2.3 EMIS support 2.4 TEVT Quality Assurance 2.5 TVEC Overseeing of Quality System 2.6 Social Marketing

National Association of TEVT Providers TVEC Providers Registration Process. Programme Accreditation Process Audit/Compliance Process Member training

HREF-HRIF Administrative Services (HAS)

Financial Management Procurement Management Competitive Proposals Management Process Commercial bank Arrangement

Human Resource Investment Fund (HRIF) Public Sector ATIs and Technical Colleges with industry partners compete for 10 grants 3.1 Governance Development 3.2 Strategic Planning 3.3. Financial Planning and Management 3.4 Entrepreneurial Management 3.5 Curriculum Acquisition Support 3.6 Equipment Support 3.7 Facility Renovation Support 3.8 Staff Training 3.9 Part Time Learning Development Support

Human Resource Endowment Fund (HREF) Private Sector Industry and TEVT Providers 1.1 HREF/HRIF

Administrative Services

1.2 National

Technology Awards Scheme

1.3 In-Industry

Graduates Training in Limited Demand, High Priority Technologies

1.4 Employee Training

Programme 1.5 Training

Partnerships Programme

1.6 TEVT Providers

Expansion and Quality Enhancement Programme

Appendix 14 155

HREF/HRIF ADMINISTRATIVE SERVICES (HAS)

Chief

Executive Officer (HREF)

Programme Manager National

Technology Awards Scheme

Programme Manager

Corporate TEVT

Programmes

Programme Manager

TEVT Providers

Programme

Finance Manager

Project Officer

Project Officer

Project Officer

Accountant

Secretary to the Treasury

HREF Council

HAS* HREF

HAS* HREF

Clerk Clerk

MTET (HRIF)

PIU

(HRIF)

HAS* HREF

HAS **HRIF

* HREF Administrative Services, an international Financial Services/Accounting Firm. ** HRIF Administrative Services will be provided by the same HAS.

Appendix 15 156

TERMS OF REFERENCE FOR THE HREF-HRIF ADMINISTRATIVE SERVICES (HAS)

1. The Government has determined to outsource these funds.1 Given the private sector orientation and need for an integrated and quick implementation strategy, a single agency might be most desirable to administer the three components of the HREF, namely: the National Technology Awards Scheme, the Corporate Programme and the TEVT Providers Programme (TPP). Each of these three components is detailed sufficiently to develop an RFP as the basis of a tendering process to select a consulting firm as implementing agents based on a request for proposal process. Section 16 of the Act provides for such action. A. Outsourcing HREF Project Administration 2. The HREF Council as constituted in the Act appoints a sub-committee as provided for in the Act, which then implements the outsourcing of the implementation of the three programmes supported by the fund. The complexities of the documentation required by ADB and the sheer volume of processing required suggests the use of external programme administration for the start up of the fund so as to minimize delays while assuring compliance with all Government and ADB requirements2. It might be noted that the World Bank in the implementation of its IRQUE programme will also use a consulting firm to administer the programme for similar reasons.3 Beyond this, a similar unit can be found in the Non-formal Education Loan currently operational in Bangladesh. Selected implementing agents would also train counterpart HREF staff in Fund management over the duration of the Loan. A consulting firm would be required to establish and to administer the National Technology Awards Scheme, the HREF Corporate Programme (CP), the HREF TEVT Providers Programme (TPP), and HRIF partnership based MTET reform processes related to performance based budgeting, EMIS, quality assurance through the formation of industry sector councils and National Association of TEVT Providers and HRIF partnership proposals for establishing and operating colleges of technology.

3. Putting in place the long term arrangements for all aspects of the HREF that continue after project completion will take time and it is important that the Fund get traction quickly and move disbursements to Industry, TEVT providers and students who are recipients of NTAs. The selected firm will put in place immediately the system proposed in this document while it works with the Ministry of Finance and TVEC on the longer term management system to be used by HREF staff and a locally engaged management firm. B. General Terms of Reference of the HAS 4. In order to ensure smooth administration of procurement and contracts resulting in timely disbursements of project funds, an HREF/HRIP Administrative Services (HAS) will be established to support the HREF National Technology Awards Scheme, Corporate Programme, the private sector TEVT Providers Programme and the HRIF MTET strengthening and selection process for colleges of technology. It consists of one Team Leader/Programme Coordinator, one Endowment and Investment Fund Specialist, one Procurement Specialist, HAS/HRIP Technical Services Specialist and two support staff. It will determine terms of reference of proposals for use of HREF. Technical specifications submitted by industries and providers that have won support under the HREF are processed by HAS in terms of civil works, consulting services, banking services in relation to Loan elements of HREF operations and supply

1 ADB, Human Resource Endowment Fund, Draft Act and Handbook, Manila, 2003, 2 Guidelines on Government Tender Procedure, Projects Assisted by Foreign Financing Agencies, Colombo, 2000. 3 World Bank, Improving Relevance and Quality of Undergraduate Education, Washington, 2003.

Appendix 15 157

contracts in accordance with ADB procedures. It will conduct semi-annual internal audits and will ensure that approved budgets will be utilized. HAS will report directly to the Project Implementation Unit (PIU). The HAS will be responsible for preparation of tender documents for procurement of goods and services. C. Consulting Firm for the HAS 5. An RFP for an international consulting firm will be initiated using the Bank’s selection process to select a firm to manage the establishment and administration of the HREF/HRIF. The RFP will be issued simultaneously with the RFP for the strengthening of MTET and selection of colleges of technology. The selected firm would start as early as possible in the Loan so as to ensure that the HREF/HRIF becomes operational as early as possible to provide incentives for system reform and to support in-industry training within the first year of the Loan. HREF staff other than the Secretary General/Chief Executive Officer will be assigned as counterpart staff to the HAS team. This will allow time to elaborate the long term management and administrative functions required of the HREF and to train local staff in these. D. Tasks of the HAS 6. The HAS is a procurement and provider quality assurance unit set up to provide a highly specialized services within the project implementation framework. Given the size of the component and the diversity of activities, it is indispensable that administrative work related to the substantial amounts of expected service and equipment contracts be dealt with in a professional and transparent way without any delay. Equally it is vital that there be no delay in disbursements to Voucher Winners, industry and TEVT providers as the flow of support is the trigger for all HREF activities. 7. The HAS will assume all functions of the Executing Agencies (EA) regarding requests for proposals, tenders and contract management, including the evaluation of proposals against published criteria, but not the signing of contracts. It will report directly to the PIU. Its task is to be responsible for general and financial administration of the HREF/HRIF during the first three years of implementation, in order to accelerate the contract awards and disbursement of ADB funds and overall project implementation. It will train HREF officials on the job to carry out all of HAS‘ tasks during the remaining time of project implementation. 8. The HAS centralizes all administrative functions of the HREF/HRIF related to administering the contract with a financial institution to manage the HREF loan portfolio including the loan component of NTA, to civil works construction, procurement of equipment and contracting services within contracts with industry for training and with TEVT providers for system expansion and improvement. It will support the HREF Council and PIU in this time-consuming and highly technical task, ensuring compliance with ADB procedures and within the project‘s financial plans and cost estimates.

1. The specific tasks of HAS:

a. As to tender and contract management:

(i) prepare request for proposals and guidelines for the use of HREF funds in the Corporate and TEVT Provider programmes and to prepare tender documents for procurement and consulting services or amounts in accordance with ADB procedures. These documents will be prepared on the basis of the terms of

Appendix 15 158

reference and technical specifications within approved proposals submitted by the HREF Board.

(ii) Advertisement and publication of applications for National Technology Awards, requests for proposals and procurement notices.

(iii) To ensure that the procurement of services document for the selection of a financial services institution to manage the loan component of the NTA scheme is prepared as scheduled in accordance with ADB procedures.

(iv) To ensure that the tender documents for procurement and services within Corporate and TEVT Provider programmes are prepared as scheduled, in close collaboration with the PIU and in accordance with ADB procedures.

(v) In the Corporate programme and TEVT Provider programme, to manage the Proposal evaluation and tender activities: notification of tender, technical support to the Evaluation Committee, preparation of supply contracts.

(vi) To finalize the draft contracts for ADB’s review and approval.

b. As to financial management:

(i) To assist the HREF/HRIF in the financial planning process and in the setting up a consistent accounting system

(ii) To liaise with the financial institution managing the loan component of NTA and loans to TEVT Providers for system expansion and ensure contract compliance.

(iii) To ensure that approved ADB allocation, government counterpart funds including corporate training levy funds, will not be exceeded.

(iv) To prepare yearly contract awards and disbursement projections to be submitted to ADB.

(v) To check and clear the project accounts. (vi) To receive invoices, supporting documents and claims from suppliers/contractors (vii) To check invoices, along with calculations and supporting documents, and verify

whether they comply with the corresponding contracts. (viii) Prepare correspondence to contractors explaining any errors or deficiencies

(missing documents etc.) (ix) Verify services and supplies on site, whenever necessary. (x) Prepare payment-related documents and order payments. (xi) Introduce payments in the accounting system and notify the PIU accordingly. (xii) Prepare withdrawal applications on a regular basis for submission to ADB. (xiii) To ensure that Impress Account are replenished and liquidated to ADB regularly. (xiv) To conduct semi-annual internal audits.

c. As to information and training of project staff:

(i) To establish and keep up to date information package or manual on procedures,

regulations and standard forms which are used for disbursement of funds and implementation of supplies, works and service contracts.

(ii) To set up and maintain a Management Information System (MIS) containing information as to contracts, suppliers and items required or purchased, accessible for HAS and the PIU.

(iii) To organize information sessions on proposal development, contract and financial management for industry, TEVT providers and HREF staff, in order to ensure a high quality of proposals plus consistency and coherence of implementation modalities.

Appendix 15 159

(iv) To help select and train on the job the seven HREF staff, who will gradually take over all tasks of the HAS at the end of its third year.

(v) To develop a long term HREF Scheme administration framework to be fully implemented by HREF staff and an outsourced local firm(s) on completion of the Loan or at an earlier date if in the judgment of the HREF and the Firm the longer systems are in place and functional. Timing of this transition shall not delay disbursements under the Loan.

2. Proposal, Tender and Contract Management by the HAS

a. Production of Request for Proposal and Tender Documents:

9. The HAS will be responsible of finalizing complete request for proposal documents for the Corporate and TEVT Providers programmes and flowing from the winning proposals, tender documents for construction, service and procurement of goods using the terms of reference and technical specifications prepared by the HREF and approved by ADB. A complete set of standard documents exists for public works, service and supply tenders, which have been prepared by ADB. For service contracts growing from the Corporate and TEVT Providers Programmes as well as the service contract with the financial institution managing HREF Loans, the criteria to be used for tender evaluation should be developed prior to the distribution of the tender documents.

b. Dispatch of Tender Documents: 10. The HAS will reproduce the required number of Request for Proposal and tender documents and dispatch the tender documents to interested bidders.

(i) For international competitive bidding procedures, an advertisement will be published in the ADB Business Opportunities (ADB-BO) and United Nations Development Business (UNDB) and in the local newspapers in the English language. The HAS will prepare publication notices and transmit them to the PIU for ADB approval and publication in the ADB-BO and UNDB.

(ii) For international shopping and local competitive bidding procedures, the HAS will advertise in local newspapers in the English language in the borrower’s country and invitation to bid shall be issued to a reasonable number of contractors or suppliers. The HAS will also transmit a copy of the tender documents to ADB for review and approval.

c. Management of Tender during Tendering Period:

11. During the request for proposals or tendering period, the HAS will manage any issues arising in connection with the RFP or tender. It shall co-ordinate the provision of responses to bidders' questions. The HAS will deal directly with questions relating to RFP or tender procedures and provide responses on technical issues. It will issue any clarification to all participants in the RFP/tender process, which have notified their intention to submit a proposal or offer. 12. HAS will amend the RFP or tender document to take account of any change if deemed necessary. HAS will ensure that HAS or HREF staff are available to assist in providing clarification to bidders. HAS will provide a workshop in each of the three years of the contract to familiarize TEVT providers and Industry with RFP and tender procedures.

Appendix 15 160

13. For Proposal selection processes and supply tenders, a clarification meeting is often held mid-way through the tendering period. Bidders are notified of the date of such meetings in the tender document. The HAS will be responsible for organizing these meetings in co-ordination with the HREF. This will involve the technical preparation of the meeting (especially if it is held on-site), a presentation to those submitting proposals and bidders, a question and answer session to allow proposes and bidders to raise issues, and the completion of detailed minutes of the meeting. The minutes will subsequently be sent to all companies who have notified their intention to make an offer. Again, HREF experts who have had a crucial role in the technical preparation of the proposal dossier should participate in the clarification/site meeting. 14. The HAS will function as a secretariat during the whole tendering and evaluation phase.

d. Receipt of Proposals and Tenders: 15. The HAS will receive all bids, either by registered mail or by hand delivery. The HAS will keep a record of the time and date of reception for all bids. Any bid, which has not been received before the deadline will not be evaluated and must be returned to the bidder unopened.

e. Evaluation of Tenders: 16. The evaluation of proposals and tenders involves a considerable commitment in terms of human resources. The majority of proposals and tenders will be for supply/service. These are evaluated according to procedures developed by ADB to ensure that evaluations are carried out in an objective and transparent manner. 17. The duration of an evaluation will vary according to the size and complexity of the package, and according to the number of proposals or tenders received. However, it should be noted that the majority of evaluations last several days. 18. Prior to the opening of each proposal or tender, an Evaluation Committee will be established. The HREF will officially nominate the members sitting on this Committee. A representative of the Ministry of Tertiary and Technical Education will preside over the Committee. 19. Members of the Committee are:

(i) A representative of the organization which has won a grant or loan from HREF the proceeds of which are being used for the purchase.

(ii) A representative of the Ministry of Finance. In the case of the selection of the financial institution to manage the loan component of the voucher scheme, Treasury will also assign a representative.

(iii) A representative of HAS or staff counterpart staff as determined by the Team Leader

(iv) The expert within the organization for whom the tender process is being run who was responsible for the preparation of technical specifications will take part without vote, as a resource person

Appendix 15 161

20. The HAS will be in charge of organizing the evaluation process and will provide the corresponding instruments (evaluation table comparing bid prices, evaluation grids etc.). It will, where necessary, solicit the necessary expertise from MTET staff or industry. 21. Tender evaluation meetings will take place in Colombo. 22. The chief role of the HAS in the evaluation process is to carry out the secretarial function. The Chairman will take responsibility for ensuring that ADB procedures are fully respected. Thus, minutes and drafts of evaluation reports are taken.

f. Contracting: 23. The HAS will submit the evaluation report to ADB for approval. It will complete the contract using the draft contract form, which was part of the tender document. Subsequently, the HAS through HREF will transmit the evaluation report to ADB for approval. 24. After ADB approval of the evaluation and HREF’s recommendation of contract award, the HAS will transmit the contract in four copies to the contractor for signature. The contractor will keep one original and return the three others to the HAS. The HAS will keep the second original and transmit the third original to ADB. The fourth original will be forwarded to PIU.

g. Closure of Tender: 25. In the case of calls for proposals and tender, unsuccessful companies should be notified in writing, after the selected bidder has signed the contract.

h. Modifications of Contracts: 26. The HAS will make any necessary contract amendments and addenda to supply and services contracts requested by the HREF. It will submit the document to HREF and the contractor for signature. For the full mechanism of tendering procedures of ADB, bidders are requested to refer to ADB Guidelines on Procurement.

3. Technical Assistance Services Required for the HAS

27. To carry out the tasks as described in the Terms of Reference for the HAS, the bidders shall propose a team, composed of six persons – four professionals and two support staff in order to ensure a sufficient management capacity and professional experience in the procurement of goods and services. 28. The HAS Team consists of: Person Months Source

i. Team Leader / HAS Coordinator 36 International ii. Endowment and Investment Fund

Specialist 36 National

iii. Procurement Specialist 36 National iv. HAS/HRIF Technical Services

Specialist 36 National

v. Administrative Assistant 36 National vi. Project Secretary 36 National

Appendix 15 162

29. The four professional experts will be recruited according to ADB guidelines on the recruitment of international consultants, whereas the support staff will be recruited according to government procedures. The contract would be three years. Bank requirements for the recruitment of consultants would be observed.

4. Profile and Responsibilities of the Contractor

30. The following criteria for qualifications and experience have to be met by the consulting firm. The specifications can be understood as modules, which should form part of the professional competence of the whole expert team. It is up to the winning bidder /contractor to compose the team accordingly.

a. Requirements to be met by the Contractor: 31. The Contractor will have to prove his:

(i) Experience in the fields of public procurement. (ii) Documented experience in running expert teams in charge of Technical

Assistance tasks, in the framework of international co-operation projects (iii) Economic and financial capacity and professional integrity (iv) Experience in working with Banks and other financial institutions

b. Responsibilities of the Contractor:

(i) The Contractor is responsible for the backstopping in support of the experts working

in the HAS. One person will be named as the permanent interlocutor for HAS, responsible for the delivery of the HAS Team vis-à-vis the HREF, PMU.

(ii) The Contractor will provide the necessary visa, travel, insurance and other necessary services, in support of the experts working in the HAS.

(iii) The Contractor will assist with purchase and installation of equipment for the HAS office, including computer hardware and software (common standard software and specific software for accounting).

(iv) The Contractor will ensure that the Team Leader maintains regular communication with the HREF, PIU and ADB. Overall responsibility for project management, monitoring and evaluation for the whole Project and for HAS is with PIU.

(v) The Contractor and the experts are not authorized to inform any third party on the contents of their work, unless they are requested to do so in writing by ADB.

(vi) The Contractor will cover the following costs for the duration of the contract: Fees for the HAS staff, office equipment, office consumables (stationery), telecommunications (including access to the Internet and Internet provider costs), vehicle costs, local travel, reports production and reproduction, translation services, travel and subsistence costs.

(vii) The Contractor has the responsibility to deliver the following documents (in English language) which will be elaborated by the Technical Assistance Team working in the HAS: Inception Report, Overall Work Plan, Annual Work Plans, Annual Reports, Six-monthly Reports and Monthly Progress Reports.

Appendix 15 163

5. Planning and Reporting

a. The HAS Team will elaborate the following documents:

(i) An Inception Report, to be delivered two months after establishment of the HAS (ii) A Plan of Operations, covering the whole period of project implementation (5 years),

co-coordinated with the PIU. This plan is to be delivered four months after the establishment of HAS.

(iii) Annual Work Plans, co-coordinated with the PIU, three months before the end of the preceding year

(iv) Annual Reports, one month after the end of the respective year (v) Half-yearly Reports, two weeks after the end of the reporting period (vi) Monthly Progress Reports, one week after the end of the reporting period (vii) Final Report, within one month of contract termination.

32. The consulting firm, through the Team Leader, will submit to the PIU on a monthly basis, a progress report summarizing the actions to be undertaken and update the work plan for the subsequent months. This will include a preliminary list of tenders to be launched, contracts to be awarded in the respective period, disbursements made during the month.

33. All plans and reports will be presented to the PIU and ADB. Operationally, the HAS consultants would work with the Chief Executive Officer of the HREF and the Project Director, PIU.

Appendix 16 164

QUALITY ASSURANCE

Sectoral Council Construc-tion

Sectoral Council Gems/ Jewellery

Sectoral Council Rubber Plastic

Sectoral Council IT

NATP takes trade standards validated by sectoral councils and sets quality standards for programmes for all TEVT Providers then audits Providers for compliance. NATP sets institutional standards on key performance indicators and audits providers performance. Certified TEVT providers gain access to HREF NATP trains providers to comply with programme and institutional standards NATP helps new providers enter the field NATP promotes members to industry as training partners

TEVT Provider Private

TEVT Provider (Public)

TEVT Provider Industry

TEVT Provider Public/ Private

TEVT Providers pay membership fees to NATP

TVEC Identifies Sector Associations and helps set up Sectoral Standards Councils TVEC assists Sector Councils to establish and /or validate trade standards at International level for technician education. TVEC approves standard and passes to NATP for providers training and compliance auditing TVEC does sample audits of NATP members

Sectoral Council Manufac-turing

Appendix 17 165

PROCESS OF SELECTING INSTITUTIONS TO BE SUPPORTED BY HRIP

Proposals passing the Compliance Review will be forwarded within 10 days to the Selection Committee appointed by TVEC to be judged as most deserving for support of up to $ 3 Million

Develop Proposal with: Technologies/Competencies to be taught Strategic Plan having five aspects Assistance in – Curriculum Equipment Renovations Staff Training Part-time Programmes

Brief QualifyingProposal

HRIP Technical Support for 6 months

Review of BQP By Technical Assistance Team

Criteria

Short List of

Proposals

TVEC

20 Proposals

HRIP

20 Final ProposalsFor Selection

Prepare Final Proposals by

Institution Heads

$ 2000 from HRIP

4 mths2 mths0 mth

Finding an Industrial Partner

To HAS for

ComplianceReview

Appendix 18 166

COST ESTIMATES ($000)

Category Foreign

Exchange

Local Currency Total A. Base Cost

1. HREF a. Administration and Management 750 640 1,390 b. Consultancies 540 324 864 c. Vehicles 150 150 c. National Technology Award Scheme 21,750 21,750 d. Corporate Program (In-industry Training) 1,000 1,000 e. Corporate Program (HREF Training) 10,000 10,000 f. Corporate Program (Training Partner) 3,000 3,000 g. HREF TEVT Provider (Equipment) 4,000 1,000 5,000 Sub Total (Component 1) 5,440 37,714 43,154 2.0 Strengthen MTET a. Pre Project Technical Assistance 350 350 b. Consultancies 420 12 432 c. Quality Assurance 700 700 d. Other 950 950 Sub Total (Component 2) 770 1,662 2,432 3.0 TEVT Capacity Building a. Institutional support 1,270 1,270 b. Equipment 12,600 1,400 14,000 c. Renovations 3,000 3,000 d. Staff Development 240 300 540 e. Consultancies 540 234 774 Sub Total (Component 3) 13,380 6,204 19,584 Sub Total (A) 19,590 45,580 65,170

B. Contingencies a. Price Contingencies 2,796 4,287 7,083 Sub Total (B) 2,796 4,287 7,083 Sub Total (A+B) 22,386

49,867 72,253

C. Interest Charges 1,396 1,396D. Taxes and Duties

Total 23,782 49,867 73,649

Percentage Share 32.3 67.7 100

Appendix 19 167

BREAKDOWN OF PROJECT COSTS BY COMPONENT Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total

1 HREF 1.1 Administration and Management

Team Leader (International 3 Years) 180 180 180 540 Endowment & Investment Fund Specialist (National 3 Years}

36 36 36 108

Procurement Specialist (National 3 years) 36 36 36 108 HAS Technical Services Specialist (National 3 Years)

36 36 36 108

Grants to Institutions for Proposals 40 40 Equipment/ Vehicles 250 250 General Administration (HAS) 250 250 250 750 Project Implementation Unit (PIU) 100 100 100 100 100 500 Sub Total 928 638 638 100 100 2,404

1.2 National Technology Award Scheme Private Providers 1,000 2,000 2,000 2,000 1,000 8,000 Public Sector Providers 1,250 2,500 2,500 2,500 1,250 10,000 Stipend 500 500 750 750 750 250 250 3,750 Sub Total 2,750 5,000 5,250 5,250 3,000 250 250 21,750

1.3 Corporate Program (In-industry Training) Loans to Industry 100 100 100 100 100 500 Training Award 100 100 100 100 100 500 Sub Total 200 200 200 200 200 1,000

1.4 Corporate Program (HREF Training) Grants to Industry 2,000 2,000 2,000 2,000 2,000 10,000 Sub Total 2,000 2,000 2,000 2,000 2,000 10,000

1.5 Corporate Program (Training Partner) Loans to Industry 750 250 250 250 1,500 Grants to Industry 750 250 250 250 1,500 Sub Total 1,500 500 500 500 3,000

1.6 HREF TEVT Provider Loans to TEVT Providers 500 500 500 500 500 2,500 Grants to TEVT Providers 500 500 500 500 500 2,500 Sub total 1,000 1,000 1,000 1,000 1,000 5,000 Sub Total - Component 1 6,878 10,338 9,588 9,050 6,800 250 250 43,154

2 MTET Strengthening 2.1 Pre-Project Technical Assistance 350 3502.2 Performance Based Financial Assistance 33 33 34 1002.3 Technician Standards 100 100 100 100 100 5002.4 EMIS System 33 33 34 1002.5 TEVT Quality Assurance 200 200 100 100 100 7002.6 Overseeing Quality Assurance 25 25 25 25 1002.7 Social Marketing 50 50 25 25 150

Institutional Strengthening (International) 60 60 TEVT Quality Assurance Specialist 180 180 360 EMIS System Specialist 12 12 Sub Total – Component 2 952 621 316 318 225 0 0 2,432

3 TEVT Capacity Building 3.1 Governance 50 50 50 1503.2 Strategic Planning 80 60 40 1803.3 Financial Planning 80 60 40 1803.4 Entrepreneurial Management 50 50 50 1503.5 Curricula/Learning Resource Materials 400 50 50 25 5253.6 Equipment 4,000 4,000 4,000 2,000 14,0003.7 Renovations 1,000 1,500 500 3,0003.8 Staff Training 160 220 160 5403.9 Part-time Learning 25 25 25 10 85

HRIF Team Leader 180 180 180 540 National Consultancies 126 108 288 Sub Total – Component 3 5,891 6,343 5,135 2,215 0 19,584 Total 13,721 17,302 15,039 11,583 7,025 250 250 65,170

Appendix 19 168

Table A19.1: Local And Foreign Project Cost ($000) I Consultants - Remuneration and Per Diem Foreign Currency Local Currency Total i. International

a HREF Team Leader/HAS Coordinator (3 Years) 540 540 b TEVT Quality Assurance Implementation Specialist (2 Years) 360 360 c. Performance Based Funding Specialist (3 months) 60 60 d. HRIF Team Leader (3 Years) 540 540 ii. National a. HREF Endowment and Investment Fund Specialist (3 Years) 108 108 b. HREF Procurement Specialist (3 Years) 108 108 c. HAS Technical Services Specialist-HRIF (3 Years) 108 108 d. EMIS Specialist (6 Months) 12 12 e. TEVT Technician Curriculum and Part-time Learning 54 54 f. TEVT Financial Planning and Management Specialist 54 54 g. TEVT Entrepreneurial Management Specialist 36 54 h. TEVT Equipment Procurement Specialist 36 36 i. TEVT Institutional Facility Renovation Specialist 36 36 j. Social Equity Specialist 18 18

2 Civil Works 3,000 3,0003 Equipment, Furniture and Vehicles

i. Equipment a. TEVT Public Sector Providers 12,600 1,400 14,000 b. TEVT Private Sector Providers 4,000 1,000 5,000 ii. Furniture - HAS Office 100 100 iii Vehicles - HAS Administration 150 150

4 Industry Assistance i. Corporate Program - (In-industry Training) a. Loans to Industry 500 500 b. Grants to Industry 500 500 ii. Corporate Program - (Grants for HREF Training) 10,000 10,000 iii. Corporate Program- ( Training Provider) a. Loans to Industry 1,500 1,500 b. Grants to Industry 1,500 1,500

5 Training Support i. Private Providers 8,000 8,000 ii. Public Sector Providers 10,000 10,000 ii. Stipend 3,750 3,750

6 Staff Development i. International Fellowships a. 20 Persons ( 60 months ) 240 240 b. 380 Persons (250 months) 300 3007 Institutional Support

a. Pre Project Technical Assistance and Proposal Design 350 40 390 b. Performance Based Financial Assistance 100 100 c. Technician Standards 500 500 d. EMIS System 100 100 e. TEVT Quality Assurance 700 700 f. Quality Assurance Management 100 100 g. Social Marketing 150 150

8 General Administration and Management i. HAS Administration 750 750

ii. Project Implementation Unit (PIU) 500 500 iii. TEVT Management a. Governance 150 150 b. Financial Planning 180 180 c. Entrepreneurial Management 150 150 d. Curricula / Learning Resource Materials Development 525 525 e. Part-time Learning 85 859 Total Base Cost 19,590 45,580 65,170

Appendix 19 169

A. Technical Notes

1. HREF Component

a. Administration and Management 1. The cost of administration and management of HREF is estimated at $2,404,000 (SLRs240.4 million) over the project implementation period. A number of activities are included under this component. The international consultant/ Team Leader who will be attached to HAS will have a contract period of 36 months at a total cost of $540,000 (SLRs54 million) or $15,000 per month and this amount includes both remuneration and per diem. Three national consultants will also be attached to this unit with 36 months contract period per each consultant. At a monthly fee of $3,000 these three consultants have been allocated $324,000 (SLRs32.4 million). The cost of both international and national consultants will total $864,000 (SLRs86.4 million) over the three-year period. 2. The administrative cost of establishing HAS is estimated at $1,750,000 (SLRs175.0 million) which is the sum of the general administration cost of $750,0000 (SLRs75.0 million) for three years at $250,000 per year, recurrent cost of Project Implementation Unit (PIU) totalling $500,000 and cost of vehicles, equipment and office furniture of HAS office amounting to $250,000 (SLRs25.0 million). The general administration cost includes local HAS staff and assistance for proposal development at the second stage of the selection process, which is allocated $40,000 for 20 public/industry partnerships.

b. Training Support 3. This component is expected to cost $21,750,000 (SLRs2175.0 million) over the five-year implementation period. It will provide training awards to students enrolled in a 2 ½ year period advanced training diploma offered by public and private sector institutions, followed by six months industry training. 4. Students seeking technician education in private institutions recognized by HAS will receive SLRs100,000 per year for 2 years or a total of SLRs 200,000 for two years. The number of awards available to the private sector will be limited to a maximum of 1000 per year and 4,000 awards will be made available during the implementation period. This will cost $8 million over five years. In addition to award recipients, it is expected that private sector institutions will also cater to about 1,500 fee-paying students. 5. Ten institutions will be selected from the public sector institutions providing technical education through the selection procedure outlined in the report to provide technician diplomas. These institutions will cater to 1,500 full time students, 1,500 part-time students and 500 students following a flexible program. A full time student will receive SLRs60,000 per year for two years, part-time students SLRs40,000 and flexi-time students SLRs20,000 during the entire duration of the programme. The public sector training awards are estimated to cost $10 million. They will also be allowed to charge fees from part-time and flexi-time students subject to the approval from HAS. 6. Students receiving awards in the public sector and full-time students in the public sector will receive a monthly stipend valued at $20 (SLRs2,000) for 21/2 years, including the industry training period of six months after completing the diploma.

Appendix 19 170

7. Both public and private sector institutions are required to submit per student cost by program at the end of each year for review and assessment of cost of technician education. However, the value of both public and private awards will remain fixed for a period of five years. Both the training award and the monthly stipend will be terminated if a student drops out from either private or public institution. 8. Part-time students are expected to complete the program within four years and flexi time students within six years. The following summarizes the expected enrolment in technician education by both award recipients as well as non-award recipients.

Table A19.2 Type of Enrolment Year 1 Year 2 Year 3 Year 4 Year 5 Private Award Recipients 1,000 1,000 1,000 1,000 Private Non-award Recipients 1,500 1,500 1,500 1,500 Sub total 2,500 2,500 2,500 2,500 Public Award Recipients (Full time) 1,500 1,500 1,500 1,500 Public Award Recipients (part- time) 1,500 1,500 1,500 1,500 Public Award Recipients (flexi-time) 500 500 500 500 Sub total 3,500 3,500 3,500 3,500 Total (Private and Public) 6,000 6,000 6,000 6,000 9. Student enrolments in the fifth year are not included at this stage since enrolments in the fifth year requires a budget to provide for awards and stipend in the sixth year. However, the continuity of financial assistance beyond the fifth year remains unclear and therefore fifth year enrolments have been excluded from the cost estimate.

c. Corporate Program (In-industry Training) 10. This programme offers assistance to industry to train employees in a field not catered by either a private or public sector institution. A loan of up to $25,000 has been provided per each training course with about 20 participants for a period of one year. In addition industry will also receive a grant of $450 per participant for a period of one year. This programme is expected to benefit about 555 employees over a five-year period.

d. Corporate Programme 11. The financial assistance available from this component will enable industries to obtain grants up to a maximum of $100,000 per industry to up grade skills of its skilled labour force employed in occupations related to a technical field. With a total allocation of $10 million, grants will be available to Between 200 and 300 industries over a five-year period. About 6,000 employees are expected to be benefited by this programme over the five-year period.

e. Corporate Programme (Training Partnerships) 12. A $3 million allocation has been provided under this component to assist industry wishing to take over part of an existing institution and offer programmes that meet specific needs. Ten industries will benefit from this program with financial assistance up to a maximum of $300,000. It is recommended that 50% of this allocation is given as an outright grant and the balance 50% as a loan payable over a period of five years.

Appendix 19 171

f. HREF TEVT Provider Expansion and Quality Enhancement Programmes

13. This component provides $5 million to private providers in technician education to improve existing facilities and purchase equipment and other teaching aids to ensure quality and standards of training .The allocation will be available to about 50 providers up to a maximum of $200,000 per institution. It is recommended that 50% of this assistance is given to institutions as an outright grant and the balance 50% is a loan payable over a period of five years.

2. Institutional Support –Strengthening of MTET 14. The strengthening of MTET is an important objective of this project to ensure efficient coordination during the implementation phase of the project. Of the key areas considered under this component, quality assurance mechanism, technician standards and social marketing assume importance. Two international consultants will provide technical assistance and one consultant will be hired for three months to develop a handbook on performance based institutional financial system as a reference guide to government and institutional financial officers and the other for 2 years for the purpose of developing a TEVT quality assurance scheme. This component is estimated to cost $2,426,000.

3. TEVT Capacity Building 15. This component is largely funded by an ADB loan. The total cost of this component is estimated at $19,288,000 over the five-year period. The largest allocation of $14,000,000 is for the ten public sector institutions selected to provide technician education. Each institution will receive a grant between $1 Million to $2 million to purchase equipment and machinery needed to conduct modern programs in technician education. Another $3 million is provided for renovations of buildings of existing institutions. The amount available per institution will not exceed $400,000. The budget of this component also provides allocation for strengthening management, technical assistance with both international and local consultants, curricula and Resource Materials development and overall administration.

Appendix 20 172

FINANCING ARRANGEMENTS ($000)

Category Total Cost ADB Financing Government Financing Foreign Local Total Foreign Local Total Foreign Local Total

A. Consultancy Services 1. International 1,500 1,500 1,500 1,500 2. Local 570 570 570 570 Subtotal 1,500 570 2,118 1,500 1,500 570 570

B. Civil Works 3,000 3,000 3,000 3,000C. Equipment and Furniture

1. Equipment 16,600 2,400 19,000 16,600 16,600 2,400 2,400 2. Furniture 100 100 100 100 3. Vehicles 150 150 150 150 0 0 Subtotal (C) 16,750 2,500 19,250 16,750 16,750 2,500 2,500

D. Industry Assistance 1. Loans 2,000 2,000 2,000 2,000 2. Grants 12,000 12,000 12,000 12,000 Subtotal (D) 14,000 14,000 14,000 14,000

E. Training Support 21,750 21,750 21,750 21,750F. Institutional Support 2,390 2,390 2,390 2,390G. Staff Development

1. Foreign 240 240 240 240 2. Local 300 300 300 300 Subtotal (G) 240 300 540 240 240 300 300

H. General Administration 750 1,420 2,170 750 1,420 1,420 Total 19,590 45,580 65,170 19,240 19,240 45,930 45,930

I. Contingencies 2,796 4,287 7,083 760 760 6,323 6,323J. Interest Charges 1,396 1,396 1,396 1,396

Grand Total 23,782 49,867 73,649 20,000 20,000 53,649 53,649 Percentage share 32.3 67.7 100 27.2 27.2 72.8 72.8

Appendix 21 173

PROJECT IMPLEMENTATION MANAGEMENT

M T E T Implementing Agency

Project Consultants Project Implementation Unit

Equipment

Procurement

Administration and

Finance

Civil Works

Project Steering Committee

H R E F Council Implementing Agency

Project Performance Monitoring and Reporting

Curriculum and Standards

Development

H R E F / H R I F Administrative

Services (H A S)

Quality Assurance Systems Development

M P D I Executing Agency

Project Institutions / Private Sector Partners

Appendix 22 174

PROJECT IMPLEMENTATION SCHEDULE 2005 2006 2007 2008 2009 2010

Project Activities Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Component 1: An operational Human Resource Endowment Fund spearheading change in TEVT into a private–public partnership based, sustainable system

1.1.1 Establishment of HREF Council

1.1.2 Organize NTAS, CP, TPP, HRIF implementation structures and processes

1.2.1 Contract to a management agency/bank the administration of the loan component of HREF activities

1.2.2 Establish and operate National Technology Awards Scheme

1.3.1 Develop mechanism for the management of the programme and prepare In-Industry Technician-Graduates Training Manual of Procedures

1.3.2 Organize workshops to train and assist potential bidders in project design, proposal development and report preparation

1.3.3 Prepare and sign contracts, monitor and evaluate implementation progress

Appendix 22 175

2005 2006 2007 2008 2009 2010 Project Activities Q

1 Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

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1.4.1 Develop mechanism for the management of the programme and prepare Employee Upgrading Manual of Procedures

1.4.2 Organize workshop to train and assist potential bidders in project design, proposal development and report preparation

1.4.3 Prepare and sign contracts, monitor and evaluate implementation progress

1.5.1 Develop mechanism for the management of the programme and prepare Training Partnerships Manual of Procedures

1.5.2 Organize workshop to train and assist potential bidders in project design, proposal development and report preparation

1.5.3 Prepare and sign contracts, monitor and evaluate implementation progress

1.6.1 Develop mechanism for the management of the programme and prepare TEVT Provider Expansion and Quality Enhancement Manual of Procedures

1.6.2 Organize workshop to train and assist potential bidders in project design, proposal development and report preparation

Appendix 22 176

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1.6.3 Prepare and sign contracts, monitor and evaluate implementation progress

Component 2: A strengthened MTET supporting a demand driven, employer responsive, public –private partnership based, TEVT system

2.1.1 Develop and implement performance based institutional finance system

2.1.2 Train senior managers in performance based institutional finance system

2.2.1 Set up EMIS system and publish services

2.2.2 Train staff to use system and data

2.3.1 Set up industry sectoral council

2.3.2 Establish technician programme standards

2.3.3 Validate programme standards with industry sectoral councils

2.3.4 Approve audit mechanism for compliance to standards

2.3.5 Train audit teams

2.4.1 Organize a voluntary national association of TEVT providers (NATP) and assist members in compliance

2.4.2 Develop institution registration and programme accreditation system with accompanying manuals 2.4.3 Train audit teams with industry participation

Appendix 22 177

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2.5.1 Develop and implement marketing strategy with special focus on the poor, women and ethnic minorities

2.5.2 Develop partnership with other centers to deliver career counseling to unemployed youth

2.5.3 Design public awareness campaign to change perception of TEVT

2.5.4 Identify industry partners in campaigns

Component 3: Institutions become demand driven and partnership based with Colleges of Technology responding to the needs of industry for technicians

3.1.1 Develop a manual of operations for Boards of Management

3.1.2 Establishment and functioning of Boards of Management

3.1.3 Train CEOs in Board relations

3.1.4 Train BOMs to oversee institutions

3.2.1 Train Board Chairs, CEOs and key staff in strategic planning

3.2.2 Develop strategic plan

3.2.3 Train staff to implement plan

3.3.1 Train staff in performance based financial planning and management

3.3.2 Train staff in ADB procurement and financial management requirements

Appendix 22 178

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3.4.1 Develop a mechanism and reward system to encourage entrepreneurial individuals and institutions

3.4.2 Train BOMs, CEOs and key staff in entrepreneurial leadership and management

3.4.3 Establish separate revenue accounts

3.5.1 Develop curriculum to TVEC approved standards

3.5.2 Establish sectoral council curriculum validation system

3.5.3 Train staff in new curriculum

3.6.1 Review of equipment needs and prepare equipment list for HRIF award winning institutions 3.6.2 Develop procurement plan and repair and maintenance procedures

3.7.1 Develop a physical facilities plan for HRIF award winning institutions

3.7.2 Identify required renovation

3.7.3 Develop financing and renovation schedule

3.8.1 Conduct training needs assessment in HRIF winning institutions

3.8.2 Develop a staff development plan

3.8.3 Implement staff development plan based on priorities

Appendix 22 179

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3.9.1 Train CEOs/Part-time learning coordinators in developing market responsive part-time education programmes

3.9.2 Promote programmes

3.9.3 Train staff to develop learning materials and implement programmes

3.9.4 Conduct and evaluate programmes offered

Pre-project Work Project Activities

Appendix 23 180

PROCUREMENT PACKAGES

Amount Package ($000) Mode A. Civil Works 1. Facility Renovation 3,000 LCB Sub-total 3,000 B. Equipment, Vehicle and Furniture ICB 1. Equipment 19,000 ICB 2. Vehicle 150 IS 3. Furniture 100 LCB Sub-total 19,250 C. Curricula/Learning Resource Materials 525 IS Sub-total 525 Total 22,775 LCB = Local Competitive Bidding, ICB = International Competitive Bidding, IS = International Shopping

Appendix 24 181

CONSULTING SERVICES REQUIREMENT OFTHE PROJECT

Component Title International

International Person Months National

National Person Months

1.1

Team Leader/ HAS Coordinator

1

36

Endowment and Investment Fund Specialist

1

36 HAS Procurement

Specialist

1

36 HAS Technical Services

Specialist-HRIF

1

36 2.1

Performance Based Funding Specialist

1

3

2.2, 2,4 and 2.5

TEVT Quality Assurance Implementation Specialist

1

24

2.3 EMIS Specialist 1 06 2.6, 3.1, 3.2 and 3.8

Team Leader, HRIF/ Institutional and Strategic Management Specialist

1

36

3.3

TEVT Financial Planning and Management Specialist

1

18 3.4

Entrepreneurial Management Specialist

1

12

3.5 and 3.9

Technician Curriculum and Part-time Learning Specialist

1

18 3.6

TEVT Equipment Specialist

1

12

3.7

TEVT Institutional Facility Renovation Specialist

1

12 Social Equity Specialist 1 06 Total 4 99 10 192

Appendix 25 182

TERMS OF REFERENCE FOR CONSULTANTS A. Team Leader/HAS Coordinator: International, 36 months The Team Leader will have twenty or more years of relevant professional experience in programme/project management, strategic planning and demonstrated capacity in managing multi-disciplinary technical assistance teams. Recent experience in Third Countries, preferably in Asia, is desirable. Specific experience in goods and services procurement would be important. Sound knowledge of ADB procedures would be an important asset. He/she will be the official contact person for the PIU and Government authorities and other partners. He/she is in charge of the elaboration and implementation of the HAS work plans and of daily management of HAS operations. He/she will ensure the co-ordination of HAS with the PIU. He/she will represent HAS in the tender evaluations. He/she may authorize the Endowment and Investment Fund Specialist, the HAS Procurement Specialist or the HAS/HRIF Technical Services Specialist, to replace him in case of absence. The candidate shall fulfill the following criteria:

(i) Graduate in economics and finance or engineering (ii) At least twenty years of professional experience in accounting, auditing and

financial management, in both public and private sector (iii) A minimum of seven years experience in the management of “service and supply

procurement” (iv) Previous work experience with an international organization, preferably with the

ADB (v) A track record with similar assignment including the management of a team of

professional experts and support staff (vi) Experience with public procurement including the ADB public procurement

regulations and practice (vii) Experience with procurement for education projects would be an asset (viii) Leadership and decision-making capacity, excellent communication,

interpersonal and management skills (ix) Highly developed oral and written communication skills in English (x) Computer literacy in standard word-processing and spreadsheet software (MS

Word and Excel) (xi) Professional experience gained in South Asia would be an asset.

1. Specific TORs:

He/she will:

(i) Establish and keep up to date an information package or manual on procedures, regulations and standard forms, which are used for disbursement of funds and implementation of supplies, works and service contracts.

(ii) Set up and maintain a Management Information System (MIS) containing information as to contracts, suppliers and items required or purchased, accessible for HAS and the PIU.

(iii) Organize information and capacity building sessions on proposal development, contract and financial management for industry, TEVT providers and HREF/TVEC staff, in order to ensure a high quality of proposals plus consistency and coherence of implementation modalities.

Appendix 25 183

(iv) Help select and train on the job the seven HREF staff, who will gradually take over all tasks of the HAS at the end of its third year.

Develop a long term HREF Scheme administration framework to be fully implemented by HREF staff and an outsourced local firm(s) on completion of the Loan or at an earlier date if, in the judgment of the HREF and the HAS, the longer systems are in place and functional. Timing of this transition shall not delay disbursements under the Loan. B. Endowment and Investment Fund Specialist He/she reports to the Team Leader/HAS Coordinator. He/she is in charge of financial administration, including budget elaboration and execution, supervision of payments and accounts of HAS and PIU. His/her tasks include the training of government staff in financial management and to establish and maintain a coherent financial management system within the Project. The candidate shall fulfill the following criteria:

(i) Graduate in economics and finance studies, chartered auditor or similar (ii) At least 15 years of experience in accounting, auditing and financial

management, in both public and private sector (iii) A minimum of five years experience in “service and supply procurement” (iv) Previous work experience with an international organization, preferably with the

ADB (v) Knowledge of and experience with ADB financial regulations and practices (vi) Experience with procurement for educational projects would be an asset (vii) Excellent computer skills, including standard word-processing and spreadsheet

software (MS Word and Excel), as well as financial, accounting and auditing software programmes

(viii) Good oral and written communication skills in English. (ix) Professional experience in South Asia would be an asset.

1. Specific TORs:

He/she will:

(i) Assist the HREF and HRIF in the financial planning process and in the setting up of a consistent accounting system

(ii) Liaise with the financial institution managing the loans to Corporate and TEVT Providers and ensure contract compliance

(iii) Ensure that approved ADB allocation, government counterpart funds including corporate training levy funds, will not be exceeded

(iv) Prepare yearly contract awards and disbursement projections to be submitted to ADB

(v) Receive invoices, supporting documents and claims from suppliers/contractors (vi) Check invoices, along with calculations and supporting documents, and verify

whether they comply with the corresponding contracts (vii) Prepare correspondence to contractors explaining any errors or deficiencies

(missing documents etc.) (viii) Verify services and supplies on site, whenever necessary (ix) Prepare payment-related documents and order payments (x) Introduce payments in the accounting system and notify the PIU accordingly (xi) Prepare withdrawal applications on a regular basis for submission to ADB

Appendix 25 184

(xii) Ensure that Imprest Account are replenished and liquidated to ADB regularly (xiii) Conduct semi-annual internal audits. (xiv) Develop counterparts for HREF long-term operation.

C. HAS Procurement Specialist: National, 36 months He/she reports to the Team Leader/HAS Coordinator. He/she is in charge of programming, execution and follow-up of tenders and contracts. He/she will assist the Team Leader in the elaboration and implementation of the work plans. The candidate shall fulfill the following criteria:

(i) Graduate in engineering, law or economics (ii) At least 15 years of experience in public procurement for supply and services,

including preparation/verification of technical specifications, preparation of tender documents, tender evaluations, contract formulation as well as general supervision of project implementation

(iii) A minimum of five years experience in “service and supply procurement” (iv) Knowledge of and experience with ADB Public Procurement Regulations (v) Experience with procurement for educational projects would be an asset (vi) Previous work experience with an international organization, preferably with the

ADB (vii) Computer literacy in standard word-processing and spreadsheet software (MS

Word and Excel) (viii) Professional experience in South Asia would be an asset.

Prepare request for proposals and guidelines for use of HREF and HRIF funds in the Corporate and TEVT Provider programmes and to prepare tender documents for procurement and consulting services in accordance with ADB procedures. These documents will be prepared on the basis of the terms of reference and technical specifications within approved proposals submitted by the HREF Council.

1. Specific TORs: He/she will:

(i) Check and clear the project accounts (ii) Ensure that all TEVT providers in approved proposals are members of NATP and

thus meet TVEC registration and programme quality standards. (iii) Finalize the draft contracts for ADB’s review and approval (iv) Advertise and publish applications for NTAs, requests for proposals and

procurement notice. (v) Ensure that the procurement of services document for the selection of a financial

services institution to manage the loan component of the Award system is prepared as scheduled in accordance with ADB procedures.

(vi) Ensure that the tender documents for procurement and services within HREF and HRIF are prepared as scheduled, in close collaboration with the HREF Council secretariat and PIU and in accordance with ADB procedures.

(vii) Provide open workshops for industry and TEVT providers on proposal writing and partnership development.

Appendix 25 185

(viii) Manage the proposal evaluation and tender activities in the HREF and HRIF including notification of tender, technical support to the Evaluation Committee and preparation of supply contracts.

(ix) Develop counterparts in procurement for HREF long-term operation. D. HAS/HRIF Technical Services Specialist: National, 36 months He/she reports to the Team Leader/HAS Coordinator. He/she will provide financial and procurement technical services to the HRIF and ensure that all HAS services are understood and available to HRIF-PIU and to the Stage 2 partnership award winners. Specific experience in goods and services procurement would be important. Sound knowledge of ADB procedures would be an important asset. Specific tasks include:

(i) Graduate in economics and finance or engineering (ii) At least ten years of professional experience in accounting, auditing and financial

management. (iii) A minimum of two years experience in the management of service and supply

procurement. (iv) Previous work experience with an international organization, preferably with the

ADB. (v) Experience with public procurement including the ADB public procurement

regulations and practice. (vi) Experience with procurement for education projects would be an asset (vii) Leadership and decision-making capacity, excellent communication,

interpersonal and management skills. (viii) Highly developed oral and written communication skills in English. (ix) Computer literacy in standard word-processing and spreadsheet software (MS

Word and Excel) (x) Professional experience gained in South Asia would be an asset.

1. Specific TORs:

He/she will:

(i) Ensure that all services provided by HAS are equally implemented in the HRIF (ii) Liaise with MTET and TVEC to ensure that all operational systems are

understood and accepted (iii) Report to PIU on contract development and requirements between HRIF and the

partnership award winners (iv) Support HRIF Award winners in developing financial and procurement systems

that meet requirements (v) Support the Team Leader-HRIF in tender openings and general transparency

measures (vi) Assist the HRIF team as requested in general workshops for partnership award

winners. (vii) Develop counterpart staff from HREF/TVEC/COTs for continuity of the operation.

Appendix 25 186

E. Performance Based TEVT Funding Specialist: International: 3 months Reporting to the Team Leader, HRIF, this position work with MTET, TVEC and Ministry of Finance to develop a performance based financing system for TEVT institutions. Based in Colombo the position will work with both public sector and private sector institutions to determine the cost per student by technology cluster. It will then prepare a plan for buying training from institutions based on a cost per auditable student but related to key performance indicators including employer satisfaction with an institutions graduates and graduate satisfaction with the training received. Working closely with the TEVT Quality Assurance Implementation Specialist, this position will develop measurement criteria for funding that reflect registration and accreditation standards validated by industry and endorsed by TVEC. Experience in working in TEVT would be an asset but senior level planning experience in industry would be an equal asset.

2. Specific TORs: He/she will:

(i) Work with MTET, TVEC and Ministry of Finance, develop a performance based institutional funding system for TEVT institutions.

(ii) Work with the Financial Planning and Management Specialist design and implement regional workshops in performance based financing for MTET institutions.

(iii) Work with the Financial Planning and Management Specialist to assist HRIF partnership award institutions to adopt a performance based funding scheme.

(iv) Work with the Financial Planning and Management Specialist in developing an implementation manual for performance based budgeting system for the COTs.

(v) Assist the HRIF Team Leader in the planning and implementation of workshops and in preparing required reports.

(vi) Work closely with the HAS Team Leader to insure that financing for training is consistent with HREF and HRIF programmes.

F. TEVT Quality Assurance Implementation Specialist: International, 24 months Reporting to the HRIF Team Leader, this position will have twenty or more years relevant professional experience in institutional registration and programme accreditation programmes in education preferably through a provider managed process. The position will require experience in developing and managing national associations of TEVT providers and in developing and delivering a broad range of member services. The position will provide training to members and prospective members in quality assurance compliance and will support HRIF Stage 2 partnership award Institutions in developing a scheme to achieve institutional registration compliance and programme accreditation compliance. The position will work with HREF Partnership Programme and TEVT Private Providers Programme to assist institutions to meet registration and programme accreditation requirements. The position will assist TVEC to develop Industry Sectoral Councils and to source and acquire international programme standards for Council validation and TVEC approval. The position will train academic auditors for both the voluntary accreditation organization and for TVEC to provide compliance assurance on the quality systems. Experience in designing and managing competitive project bidding processes would be an asset as would experience in the design of national TEVT social marketing programmes.

Appendix 25 187

1. Specific TORs: He/she will:

(i) Develop a plan for the assignment of TVEC authority in TEVT registration to a national voluntary association.

(ii) Develop a self-funded national voluntary association of public and private TEVT providers possibly called NATP (National Association of TEVT Providers).

(iii) Train independent TEVT quality auditors. (iv) Train quality auditors for TVEC as counterparts to be randomly assigned to NATP

Quality Assessment Teams to ensure the compliance of the national association with agreed standards and procedures.

(v) Develop a framework for industry sectoral councils to appoint or endorse the appointment of technical specialists to audit teams.

(vi) Develop and deliver workshops for TEVT providers and Industry on the national TEVT quality standards programme and the application of the NVQ system.

(vii) Coordinate the outsourcing of an agreed TEVT Social Marketing Programme in collaboration with the HRIF Team Leader.

(viii) Develop quality manuals for the implementation of a national quality assurance system for TEVT.

(ix) Assist the HRIF Team Leader in the planning and implementation of workshops and in preparing required reports.

G. EMIS Specialist: National, 6 months Reporting to the Team Leader, HRIF, this position will assist MTET in identifying the structure of an EMIS that would support decentralized, board-governed COTs. The position should be a specialist in finding a close fit between off-the-shelf EMIS and MTET, TVEC and institutional needs. The position will design the system and specify the required hardware and software. He will train MTET, TVEC and COTs staff in system use. He will work with the Financial Planning and Management Specialist to achieve some common use of systems and hardware. He will coordinate with the HAS Team Leader to put in the EMIS system as part of the TEVT Providers Programme.

1. Specific TORs : He/she will:

(i) Develop an EMIS plan that will meet the needs of MTET to oversee TEVT institutions in a decentralized management environment.

(ii) Identify the required software and hardware to operate the system. Prepare the equipment and operating specifications of the system or inclusion in the HRIF competitive process.

(iii) Working with the HAS/HRIF Technical Services Specialist prepare tender documents for the hardware and software of the EMIS.

(iv) Train MTET/TVEC/COTs staff as counterparts for the operation of the system. (v) Assist the HRIF Team Leader in the planning and implementation of workshops

and in preparing required reports.

Appendix 25 188

H. Team Leader, HRIF and Institutional and Strategic Management Specialist: International, 36 months

The Team Leader will have twenty or more years of relevant professional experience in programme/project management, institutional management, policy analysis and development, strategic planning, social marketing, career planning, TEVT teacher education and staff development, and demonstrated capacity in managing multi-disciplinary technical assistance teams in the TEVT sector. Experience in advising Government in policy development especially in decentralizing TEVT is important. Substantial experience in working with industry to create public-private partnerships in TEVT is important. Ability to design and conduct workshops for training TEVT institution leaders is a requirement. Knowledge of Institutional and programme quality assurance systems would be an asset. Recent experience in South Asia is desirable. Experience in designing and managing competitive project bidding processes would be an asset. He/she will be the official contact person for the PIU and Government authorities and other partners. He/she is in charge of the elaboration and implementation of the HRIF and of other actions designed to strengthen MTET and TEVT Institutions. He/she will ensure the co-ordination of HRIF activities with the PIU.

1. Specific TORs: He/she will:

(i) Establish an office for the HRIF and MTET strengthening activities. (ii) Establish communications with PIU, TVEC, MTET, HAS, and TEVT institutions. (iii) Produce a plan for the restructuring of MTET so that it supports a demand driven

TEVT system with full industry involvement and a performance based financial system for public institutions.

(iv) Draft legislation or amendments of existing Acts for the legal status, operation and sustainability of selected COTs.

(v) Develop an acceptable strategic plan for the social marketing of technician education programme and raising public awareness on TEVT system and programmes.

(vi) Implement the social marketing plan and public awareness programmes in collaboration with media/advertising agencies and career guidance centres.

(vii) Produce a framework for TVEC in which industry leads programme standard validation and TVEC exercises a planning and quality control function for TEVT.

(viii) Develop with TVEC an acceptable strategic planning framework for TEVT institutions that includes all criteria of the HRIF Partnership Awards Programme (PAP).

(ix) Design and implement regional workshops in strategic planning for MTET institutions.

(x) Provide specific assistance to HRIF PAP Stage 2 institutions in developing their strategic plans.

(xi) Develop with TVEC an acceptable staff development framework for TEVT institutions that meets all criteria of the HRIF Partnership Awards Programme.

(xii) Design and implement regional workshops in developing and managing staff development programmes for MTET institutions.

(xiii) Support HRIF PAP Award winners in implementing their approved strategic plans.

Appendix 25 189

(xiv) Lead in the development of selection criteria and develop a scoring system for the HRIF Partnership Awards Programme.

(xv) Liaise with HAS Services Specialist-HRIF to ensure full compliance in the implementation of Awards with ADB requirements.

(xvi) Ensure that acceptable gender quotas and appropriate minority group and poverty targets are carried out by COTs.

(xvii) Lead in the development of manuals of business operations of COTs and its linkage with industry and other relevant sectors.

(xviii) Train counterpart staff/CEOs of COTs as strategic and entrepreneurial managers. (xix) Provide leadership and coordination to all consultants. (xx) Be responsible for all reports required by ADB and PIU.

I. TEVT Financial Planning and Management Specialist: National, 18 months Reporting to the Team Leader, HRIF, this position will provide training and direct institutional assistance in training MTET, TVEC and COTs staff in financial planning and management. As part of their transition to Board-managed and partnership financed COTs, financial planning and management skills will be vital. This position ensures that the financial plans prepared as part of the strategic plan are reasonable and comprehensive and include earned revenue assumptions that are achievable will be important. Liaising with the HAS consultants will also be important The position will require significant national travel as most support activities will occur in the participating institutions and industries. Fluency in Sinhala and Tamil will be important and written and spoken fluency in English a requirement. The incumbent should have experience in training and upgrading staff in financial planning and management. Experience in working in TEVT would be an asset but senior level financial planning experience in industry would be an equal asset.

1. Specific TORs: He/she will:

(i) Develop with MTET/TVEC an acceptable financial planning framework for TEVT institutions that includes performance based criteria.

(ii) Design and implement regional workshops in financial planning and management for MTET institutions.

(iii) Provide specific assistance to COTs in developing the financial planning and management component of their strategic plans.

(iv) Train financial managers of COTs (v) Produce a Handbook in TEVT Financial Planning as an instruction and operation

manual. (vi) Support COTs in implementing the approved strategic plan. (vii) Assist the HRIF Team Leader in the planning and implementation of workshops

and in preparing required reports. J. TEVT Entrepreneurial Management Specialist: National, 12 months Reporting to the Team Leader, HRIF, this position will provide training and direct institutional assistance in training MTET and TVEC senior staff, COTs staff and managers in the planning and operation of entrepreneurial, demand driven, market responsive TEVT institutions. It will provide the same function for part time training. As part of their transition to Board-managed and partnership financed COTs skills in responding to training opportunities in industry and the

Appendix 25 190

community to generate revenue will be critical. This position will be working with the Team Leader to ensure that the marketing plans prepared as part of the strategic plan are reasonable and comprehensive and include earned revenue assumptions that are achievable will be important. The position will require significant national travel, as most support activities will occur in the participating institutions and industries. Fluency in Sinhala and Tamil will be important and written and spoken fluency in English a requirement. The incumbent should have experience in training and upgrading staff in entrepreneurship. Experience in working in TEVT would be an asset but senior level financial planning experience in industry would be an equal asset.

1. Specific TORs: He/she will:

(i) Develop with TVEC an acceptable entrepreneurial operational framework for TEVT institutions.

(ii) Design and implement regional workshops in developing and managing the entrepreneurial institution for MTET institutions.

(iii) Design and implement regional workshops in developing and managing part time revenue-generating community based and industry based programmes.

(iv) Provide specific assistance to COTs in developing the marketing and revenue generation component of their strategic plans.

(v) Train institutional CEOs and managers of COTs in entrepreneurial management skills.

(vi) Audit the marketing and revenue generation component of the strategic plans of COTs.

(vii) Support COTs in implementing the approved marketing plan. (viii) Assist the HRIF Team Leader in the planning and implementation of workshops

and in preparing required reports. K. Technician Curriculum and Part-time Learning Specialist: National, 18 months Reporting to the Team Leader, HRIF, this position will initiate together with TVEC the development of the 2 ½ year Technician Diploma Programme. The position requires extensive experience in curriculum designing and learning materials development both for formal technician education programme and part-time learning courses that cater to industry and employed workers. A proven experience in open learning/flexible learning systems implementation and development of multimedia and web-based learning systems would be an asset. In addition, a good knowledge of sourcing out curriculum and training standards available from the world education market for local adaptation and validation by industry would be a real asset. Experience in working in TEVT systems and industry would be an additional advantage. Writing skills and fluency in English will be an essential requirement.

1. Specific TORs: He/she will:

(i) Assist TVEC in developing the framework of the Technician Diploma Programme for implementation under the project.

(ii) Work closely with the QA Implementation Specialist in the search from the world education market for internationally-benchmarked technician curricula and

Appendix 25 191

associated training standards for local adaptation and validation by industry sector councils and approval of TVEC.

(iii) Work closely with industry sector councils, technical committees and other consultants in validating training standards for new and emerging technologies to be introduced including part-time learning programmes that cannot be outsourced from the international education market.

(iv) Orient COT CEOs, senior staff and teaching personnel on the new technician curriculum and training standards including delivery, student assessment, examination, certification and accreditation systems.

(v) Conduct workshops for teacher trainers and teachers on the implementation of the new technician curriculum.

(vi) Assist in the introduction and validation of the prototype technician curriculum and standards in the COTs for feedback and refinement.

(vii) Develop capacity and capability of COTs in designing and conducting part-time learning programmes using flexible and distance modes and as a means of income-generation for financial sustainability.

(viii) Assist in developing and instilling a corporate culture conducive to continuous improvement of the COTs in general and the curriculum and its delivery in particular.

(ix) Submit performance report to Team Leader. L. Equipment Specialist: National, 12 months Reporting to the Team Leader, HRIF, this position will assist COTs to inventory training equipment and assess its usefulness. It will work with MTET to develop and implement a disposal programme for excess, inappropriate and unusable equipment for technician training. The position will work with COTs to develop equipment requirements based on programme standards and to ensure that industry sectoral councils validate proposed equipment lists. The position will work with the HAS/HRIF Technical Services Specialist to ensure that relevant ADB procedures are followed in equipment specification and the development of procurement packages. The position will require significant national travel as most support activities will occur in the participating institutions and industries. Fluency in Sinhala and Tamil will be important and written and spoken fluency in English a requirement. The position requires broad experience in evaluating lab equipment and in matching equipment to training needs.

1. Specific TORs: He/she will:

(i) Develop with the HAS/HRIF Technical Services Specialist a plan for equipment

acquisition that meets all ADB requirements. (ii) Design and implement regional workshops in equipment specification and

acquisition requirements (iii) Ensure that all proposed equipment is directly related to TVEC approved

programme standards. (iv) Audit the equipment component of the strategic plans of COTs for compliance

with approved partnership award. (v) Ensure that all equipment proposed by COTs has been validated by Industrial

Sector Committees before procurement. (vi) Working with the HAS/HRIF Technical Services Specialist support COTs in

complying with all requirement to move to the procurement stage.

Appendix 25 192

(vii) Assist in the evaluation of bids and award of contracts. (viii) Develop manuals for equipment planning and maintenance system in the COTs. (ix) Develop list of equipment standards for technologies offered at COTs. (x) Train counterpart/technology staff in the operation and maintenance of

equipment. (xi) Assist the HRIF Team Leader in the planning and implementation of workshops

and in preparing required reports. M. Institutional Facility Renovation Specialist: National, 12 months Reporting to the Team Leader, HRIF, this position will assist COTs to determine necessary renovations required to house new equipment required to implement their technician programme. The position will work with the HAS/HRIF Technical Services Specialist to ensure that relevant ADB procedures are followed in minor civil works. The position will review all COTs proposals for renovation to ensure that they are done within the scope of the Award. The position will require extensive experience in civil works, architectural designing, facility planning, tendering and contract supervision. The position will involve frequent travels, as renovations are done at institutional level. Fluency in Sinhala and Tamil will be important and written and spoken fluency in English a requirement. The position requires broad experience in planning and construction work.

1. Specific TORs: He/she will:

(i) Inventory the needs for facility renovation of COTs in coordination with other HRIF consultants.

(ii) Train key staff through workshops in facility planning and renovation of COTs. (iii) Review the renovation component of the strategic plans of COTs for

compliance with partnership awards and ADB requirements. (iv) Work with the HAS/HRIF Technical Services Specialist support COTs in

complying with all requirements to move to the procurement stage. (v) Assist in the evaluation of bids and award of contracts. (vi) Develop manuals for facility maintenance and standards for technologies

offered at COTs (vii) Train counterpart/technology staff on facility planning and maintenance. (viii) Assist the HRIF Team Leader in the planning and implementation of

workshops and in preparing required reports. N. Social Equity Specialist: National, 6 months Reporting to the Team Leader, HRIF, this position will ensure COTs proposals have appropriate, achievable and measurable criteria for gender, minority participation and disadvantaged areas. The position will require working closely with other consultants to include gender and minority inclusion strategies. The position will work with the Institutional Facility Renovation Specialist to ensure that COTs are appropriately equipped to meet the needs of female students. The position will require working closely with the QA Implementation Specialist in carrying out social marketing strategies and public awareness programmes for technological education to the grassroots’ level including parents, women, minorities and other disadvantaged groups. The position will require a lot of contacts with support services of participating institutions and industries. Fluency in Sinhala and Tamil will be important and written and

Appendix 25 193

spoken fluency in English a requirement. Experience in working in industry and NGOs would be an asset.

1. Specific TORs: He/she will:

(i) Develop criteria for RFPs at both HRIF PAP Stage 1 and 2 for gender and minority group participation.

(ii) Design and implement regional workshops in gender and minority group inclusion and in making TEVT more sensitive to the needs of female students.

(iii) Provide assistance to partnership award institutions in carrying out the gender and minority inclusiveness component of their strategic plans.

(iv) Coordinate with the contracted group/s for social marketing in developing and implementing a public awareness programme to make TEVT institutional operations more supportive of women and minorities.

(v) Work closely with the team of consultants to determine the learning needs of women and minority groups in the adjacent communities.

(vi) Support HRIF PAP Award winners in implementing the gender and minority inclusiveness plan.

(vii) Prepare a Handbook on pro-poor, pro-minority strategies for TEVT Institutions. (viii) Prepare a Handbook in Making TEVT Female Friendly for TEVT staff. (ix) Submit performance reports.

Appendix 26 194

PROJECT PERFORMANCE MONITORING INDICATORS

Outcome/Goal 2005 Baseline

2008 Mid-term

2010 Final

HREF Indicators: 1 Human Resource Endowment Fund:

• HREF Act passed and functioning (y/n) Yes

Yes

Yes

2 National Technical Awards System: • NTAS Management Agency/Bank operational

(y/n) • NTAs Disbursed (Cum.#) • Full time • Part time • Maximum Loan/grant mix per student • Study/Industrial placement stipend per student

Yes 0 0 0

Yes 7,500 6,000 $1,000 $240

Yes 10,000 7,500 $1,000 $240

3 CP-In-industry Technician Graduates Training : • Technician graduates in in-industry training

supported (Cum # & Women %) • Grant industry to train groups of 20 students

with NTAs of 12 months training • Development loans each up to SLR 10 Million to

industry

0 0 0

300 (50% W) $450 per trainee

12 loans

500 (50% W) $450 per trainee 20 loans

4 CP – HREF Employee Training Programme: • Workforce productivity improvement grants on

competitive bidding proposals • Technician graduates

0 0

6M 3,600

3M 6,000

5 CP – Training Partnerships: • Loans/Grants to take-over all/part of existing

training institutions • Number of cumulative loans

0 0

2 M 5

3 M 10

6 TEVT Provider Programme • Increase in number of National TEVT Providers

in National Growth Fields (y/n) • Loan/grants

Yes

Yes 2 M

Yes 5 M

MTET Indicators: 1 Private-Public Partnerships:

• Private–Public partnerships developed and responded to labour market needs (y/n)

No

Yes

Yes

2 Performance Based Institutional Financial System: • Performance based Institutional Finance System

in place

No

Yes

Yes

3 Technical Standards: • Industry Sector Councils in place (y/n) • Accreditation and quality assurance system

functioning (y/n) • Training standards validated by industry

No No No

Yes Yes Yes

Yes Yes Yes

4 EMIS System: • EMIS is in place and functioning (y/n)

No

Yes

Yes

5 TEVT Quality Assurance: • Rigorous quality assurance programme in place

No

Yes

Yes

Appendix 26 195

Outcome/Goal 2005 Baseline

2008 Mid-term

2010 Final

6 TVEC Overseeing Quality Assurance System: • Voluntary National Association of TEVT

Providers in place (y/n)

No

Yes

Yes

7 Social Marketing and Career Guidance: • Improved public awareness of high quality

technical education

Low

Moderate

High

COTs Indicators: 1 Colleges of Technology:

• Six COTs are functioning (y/n) • Enrolment

No 0

Yes 4,200

Yes 6,300

2 Governance: • BOMs of COTs in place (y/n)

Yes

Yes

Yes

3 Strategic Planning: • Strategic plans developed and operational (y/n)

Yes

Yes

Yes

4 Financial Planning and Financial Management: • Financial operations flexible and autonomous

(y/n)

Yes

Yes

Yes

5 Entrepreneurial Management: • Entrepreneurial skills of COT’s CEOs

developed

Low

Moderate

High

6 Curriculum: • Developed according to international

benchmarks

Yes

Yes

Yes

7 Equipment: • Installed equipment met emerging technology &

curriculum needs (y/n)

No

Yes

Yes

8 Renovations : • Renovation done (y/n)

No

Yes

Yes

9 Staff Training: • Quality of staff training • Gender balance

Low Low

High Moderate

High High

10 Part-time Learning: • Improved training partnership with industry

Low

Moderate

High

Appendix 27 196

COMPUTATION OF ECONOMIC BENEFITS OF HREF AND HRIF Economic benefits of HRIP have been computed based on the following assumptions. A. Employment Benefits

(i) The number of students successfully completed the diploma is estimated at 90%. The balance 10% either drops out or fails to obtain required grades to obtain the diploma.

(ii) Full time students complete the diploma in 2 ½ years, part time in 4 years and flexi time in 6 years.

(iii) Full time fee-paying students are not included in this calculation since they are unlikely to directly benefit from the project.

(iv) The number of full time students who will be employed in the local manufacturing sector is estimated at 70%, about 20% will seek employment overseas after two years experience in the country and the balance 10% is considered as not employed at any given year.

(v) The cumulative total of graduates who will be employed in local industry after completion of the program will increase from 1,770 in the 3rd year to 54,800 in the 20th year.

(vi) The number of part time and flexi time students who will be employed in local industry has been estimated at 90% and the balance 10% will seek employment overseas.

(vii) In calculating economic benefits, the potential wages from both domestic and foreign employment have been used. In the absence of technician education, these students would be employed in non skill categories with about SLRs 5,000 per month ($50). With the project these graduates will receive about SLRs 8,000 per month ($80) giving an incremental benefit of of SLRs 3,000 ($30) per month. In addition they will receive an annual increment of 10% after two years in employment and this increment is directly related to labour productivity.

(viii) Wage rate in foreign employment in technician grade with two years local experience is taken as $370 per month and this amount represents the average salary of selected technician grades currently offered by foreign employers. In calculating benefits from foreign employment, the local wage rate for unskilled workers will be deducted.

(ix) Computation details of employment benefits are shown in Table A27.1. B. EIRR Analysis

(i) The EIRR analysis for HRIF component covers three periods, i.e., 20 years, 15 years and 10 years. The 20 period assumes investment in the 10th and the 15th year to upgrade technology and purchase of new equipments by public and private sector training institutions. In the 10th year $14.0 million is expected and in the 15th year $7.0 million.

(ii) Investment requirement in the 10 year EIRR calculation is limited to the allocation provided under this project.

(iii) Financing sources to cover additional investment have not been identified at this stage. The assumption only states a need to upgrade the technology on regular basis.

Appendix 27 197

Table A27.1: Projected Employment and Employment Income from the HRIF Investment

Year 1

Yea 2

Year 3

Year 4

Year 5 Year 6

Year 7 Year 8 Year 9 Year 10 Year 11

Year 12

Year 13 Year 14

Year 15

Year 16 Year 17

Year 18 Year 19 Year 20

Employment Forecast Award Recipients

Private 720 1,440 2,160 2,880 3,600 4,320 5,040 5,760 6,480 7,9207,200 8,640 9,360 10,080 10,800 11,520 12,240 12,960Public - Full Time 1,050 2,130 3,210 4,290 5,370 6,450 7,530 8,610 9,690 10,770 11,850 12,930 14,010 15,090 16,170 17,250 18,330 19,410 Public - Part -time 1,050 2,130 3,210 4,290 5,370 6,450 7,530 8,610 9,690 10,770 11,850 12,930 14,010 15,090 16,170 17,250 Public - Flexi Time 500 860 1,220 1,580 1,940 2,300 2,660 3,020 3,380 3,740 4,100 4,460 4,820 5,180 Full Time Total (Private +Public) 1,770 3,570 5,370 7,170 8,970 10,770 12,570 14,370 16,170 17,970 19,770 21,570 23,370 25,170 26,970 28,770 30,570 32,370 Part and Flexi Time (Public)

0 0 1,050 2,130 3,710 5,150 6,590 8,030 9,470 10,910 12,350 13,790 15,230 16,670 18,110 19,550 20,990 22,430

Total 1,770 3,570 6,420 9,300 12,680 15,920 19,160 22,400 25,640 28,880 32,120 35,360 38,600 41,840 45,080 48,320 51,560 54,800 Employment Breakdown Domestic Employment Full Time Total (Private +Public) 1,770 3,570 3,759 5,019 6,279 7,539 8,799 10,059 11,319 12,579 13,839 15,099 16,359 17,619 18,879 20,139 21,399 22,659 Part and Flexi Time

0 0 1,050 2,130 3,339 4,635 5,931 7,227 8,523 9,819 11,115 12,411 13,707 15,003 16,299 17,595 18,891 20,187

Total Domestic 1,770 3,570 4,809 7,149 9,618 12,174 14,730 17,286 19,842 22,398 24,954 27,510 30,066 32,622 35,178 37,734 40,290 42,846 Foreign Employment Full Time Total (Private +Public) 0 0 1,074 1,434 1,794 2,154 2,514 2,874 3,234 3,594 3,954 4,314 4,674 5,034 5,394 5,754 6,114 6,474 Part and Flexi Time

0 0 0 0 371 515 659 803 947 1,091 1,235 1,379 1,523 1,667 1,811 1,955 2,099 2,243

Total Foreign 0 0 1,074 1,434 2,165 2,669 3,173 3,677 4,181 4,685 5,189 5,693 6,197 6,701 7,205 7,709 8,213 8,717Employment Income ($000) 1. Domestic Base Salary 637 1,285 1,933 2,581 3,229 3,877 4,525 5,173 5,821 6,469 7,117 7,765 8,413 9,061 9,709 10,357 11,005 11,653 Productivity Related Increments 64 129 193 258 323 388 453 517 582 647 712 777 841 906 971 1,036 Part and Flexi Time 105 213 334 464 593 723 852 982 1,112 1,241 1,371 1,500 1,630 1,760 1,889 2,019 2. Foreign Employment Income 4,124 5,507 8,314 10,249 12,184 14,120 16,055 17,990 19,926 21,861 23,796 25,732 27,667 29,603 31,538 33,473 Total Benefits ($000) 637 1,285 6,226 8,429 12,070 14,848 17,626 20,403 23,181 25,959 28,737 31,514 34,292 37,070 39,848 42,625 45,403 48,181

Appendix 27 198

Table A27.2: Economic Evaluation of HRIF Component ($000)

Project Costs or Benefits

Year 1 Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

Year 20

A Project Costs or Benefits MTET Strengthening 946 621 316 318 225 TEVT Equipment 4,000 4,000 4,000 2,000 10,000 5,000 TEVT Rennovation 1,000 1,500 500 TEVT Staff Training 160 220 160 TEVT Other 767 623 475 215 HREF TEVT Provider 1,000 1,000 1,000 1,000 1,000 4,000 2,000 National Technical Award

2,250 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500

Stipend 500 500 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 Price Contingencies 472 987 1,232 927 414 Total Project Cost 11,095 13,951

12,933

9,710 6,889 5,250 5,250 5,250 5,250 19,250 5,250 5,250 5,250 5,250 12,250 5,250 5,250 5,250 5,250 5,250

B Project Benefits Domestic Employment 637 1,285 1,933 2,581 3,299 3,877 4,525 5,173 5,821 6,469 7,117 7,765 8,413 9,061 9,709 10,357 11,015 11,653 Productivity Related Benefits 64 129 193 258 330 388 453 517 582 647 712 777 841 906 971 1,036 Part and Flexi Employment 105 213 334 464 593 723 852 982 1,112 1,241 1,371 1,500 1,630 1,760 1,889 2,019 Foreign Employment 4,124 5,507 8,314 10,249 12,184 14,120 16,055 17,990 19,926 21,861 23,796 25,732 27,667 29,603 31,538 33,473 Total Income

0 0 637 1,285 6,226 8,430 12,140 14,848 17,632 20,404 23,181 25,958 28,737 31,514 34,292 37,070 39,847 42,626 45,413 48,181

C Net Benefits -11,095 -13,951 -12,296 -8425 -663 3,180 6,890 9,598 12,382 1,154 17,931 20,708 23,487 26,264 22,042 31,820 34,597 37,376 40,163 42,931

Period of Evaluation 20 Years 15 Years 10 Years EIRR NPV EIRR NPV EIRR NPV

1 Base Case 17.9% 27,414 13.1% 3,210 -5.90% -22,0422 Cost up by 10% 16.3% 20,778 11.0% -3,0793 Benefits down by 10% 16.1% 18,036 10.8% -3,4004 Combination of 2 & 3 14.5% 11,400 8.6% -9,6915 Cost up by 20% 14.8% 14,1416 Benefits down by 20% 14.1% 8,6597 Combination of 5 & 6 11.0% -4,634

Appendix 27 199

Table A27.3: Economic Evaluation of HREF Component ($000)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cost or Benefits

A

Project Costs In-industry Training 200 200 200 200 200 HREF Training 2,000 2,000 2,000 2,000 2,000 Training Partner 1,500 500 500 500 HREF Administration 928 638 638 100 100 Price Contingencies 187 536 637 735 947 Total Cost 3,315 4,874 3,975 3,535 3,747

B Project Benefits Increase in Value Added 1,308 2,617 3,926 5,235 5,235 5,235 5,235 5,235 5,235 5,235

C Net Benefits -2,007 -2,257 -49 1,700 1,488 5,235 5,235 5,235 5,235 5,235

Value Addition Increase 1.50% 1.00%1 PV of Cost 12,876 12,8762 PV of Benefits 23,053 15,3693 B/C Ratio 1.64 1.194 EIRR 41% 20%5 Employment Benefit 4,462 2,9756 20% increase in Productivity 3,718 2,478

Appendix 27 200

Table A27.4: Economic Evaluation of Combined Project Costs and Benefits ($000)

Project Costs or Benefits

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

A Project Costs or Benefits HREF Component 6,868 10,328 9,578 9,040 6,840 250 250

MTET Strengthening 946 621 316 318 225 TEVT Capacity Building 5,927 6,361 5,135 2,215 14,000 Price Contingencies

659 1,522 1,868 1,660 1,375

Total Cost

14,400 18,832 16,897

13,233 8,440 250 250 0 0 14,000 0 0 0 0 0

B Benefits HREF Component 1,308 2,617 3,926 5,235 5,235 5,235 5,235 5,235 5,235 5,235 5,235 5,235 5,235 5,235 5,235 HRIF Component 0 0 637 1285 6226 8430 12140 14848 17632 20404 23181 25958 28737 31514 34292 Total Benefits

1,308 2,617 4,563 6,520 11,461 13,665 17,375 20,083 22,867

25,639 28,416 31,193 33,972 36,749 39,527

C Net Benefits -13,092 -16,215 -12,334 -6,713 3,021 13,415 17,125 20,083 22,867 11,639 28,416 31,193 33,972 36,749 39,527

Period of Evaluation 15 Years 10 Years EIRR NPV (000) EIRR NPV (000)

1 Base Case 22.2% 37,402 13.6% 3,2082 Cost up by 10% 20.1% 31,618 11.0% -2,1253 Benefits down by 10% 19.8% 27,878 10.8% -2,4464 Combination of 2 & 3 17.8% 22,093 10.1% -3,7315 Cost up by 20% 18.2% 25,834 6 Benefits down by 20% 17.3% 18,353 7 Combination of 5 & 6 13.7% 6,784

Note: 1. Additional investment is not considered in the 10th year. 2. The continuity of the project funding is not assumed beyond the project implementation period.

Appendix 28 201

MATRIX OF KEY POLICIES REQUIRED BY THE PROJECT Component/Sub-component Policy Needed A. Component 1: Making the HREF operational

as a springboard for changing TEVT into a public-private partnership based, sustainable system

1.1 Establishment of HAS for HREF and HRIF

Implementation 1.2 NTAS: Technician Education Programmes 1.3 Corporate Programmes: HREF In-Industry

Graduate Training 1.4 Corporate Programmes: HREF Employee

Training

1.5 Corporate Programmes: HREF Training Partnerships

1.6 HREF TEVT Provider: Expansion and Quality

Enhancement Programme B. Component 2: Strengthen MTET to support

a demand-driven, employer-responsive and public-private partnership based TEVT system 2.1 Performance-based Institutional Finance

System

2.2 Technician Standards

2.3 EMIS

2.4 TEVT Quality Assurance

2.5 Overseeing of the Quality Assurance System

2.6 Social Marketing and Career Guidance Programmes

C. Strengthen the capacity of selected public

sector TEVT institutions to become demand- driven and partnership based colleges of technology (COTs) so as to respond to the needs of industry for technicians 3.1 Institutional Governance

• Guidelines and criteria on selection of consulting firm for HAS

• Guidelines and criteria for NTAS on merit basis

• Guidelines and criteria for awards of grants and loans to industry sector

• Guidelines and criteria for awards of grants to eligible firms who have contributed to the tax levy

• Guidelines and criteria for evaluation of partnership proposals, awards of grants and loan repayment

• Guidelines and criteria for awards of grants and repayment of loans

• Implementing guidelines on performance-based budget system for TEVT

• Guidelines on approval and validation of training standards which are either outsourced or locally developed

• Operating system and maintaining MIS for performance-based budget, system performance and system link, i.e., TVEC, JobsNet

• Authorizing the formation and recognition of a volunteer national association of TEVT providers

• Adoption of an NVQ framework including technician programmes

• Formation of industry sector councils • Decentralizing the quality assurance

and accreditation functions of TVEC to the national association of TEVT providers for self-quality audit

• Promotion of technician education for public awareness, as career options and social image improvement of technician education

• Guidelines and selection criteria for COTs

• Composition of Boards of Management (BOMs) of COTs

Appendix 28 202

Component/Sub-component

3.2 Strategic Planning

3.3 Financial Planning and Financial Management

3.4 Entrepreneurial Management

3.5 Curriculum Innovation

3.6 Equipment Upgrading

3.7 Facility Renovation

3.8 Staff Training

3.9 Part-time Learning

Policy Needed

• Development of strategic and

operational plans for COTs to include relevant and measurable programmes for staff, curriculum, equipment, finance and industry partnerships

• Development of a performance based budget and system

• Promotion of entrepreneurial management system at COTs as prototype/model for TEVT

• Setting qualification standards for CEOs and key positions in COTs

• Adoption of an Industrial Technician Diploma programme with internationally benchmarked training standards and validation by industry

• Prescribing admission tests, entry qualifications, recognition of prior learning (RPL), equivalency of credits and skills testing and certification of technicians

• Adoption of equipment standards for technician programme

• Adoption of space and facility standards for technician programmes including gender requirements

• Training qualifications and recommendations of technician teachers

• Industry experience and generic skills as essential requirements of teaching staff/instructors of technician programmes

• Promotion of flexible learning systems in COTs and corporate training programmes as income generating and recovery strategies

HAS = Administrative support services for HREF and HRIF, HREF = Human Resource Endowment Fund, HRIF = Human Resource Investment Fund, TVEC = Tertiary and Vocational Education Commission, NTAS = National Technology Award Scheme.