PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: PIDA3125 Public Disclosure Copy Project Name Bolivia: Improving Employability and Labor Income of Youth Project (P143995) Region LATIN AMERICA AND CARIBBEAN Country Bolivia Sector(s) Public administration- Other social services (60%), Vocational training (40%) Theme(s) Improving labor markets (90%), Education for all (10%) Lending Instrument Investment Project Financing Project ID P143995 Borrower(s) Plurinational State of Bolivia Implementing Agency Ministry of Labor, Employment and Social Provision Environmental Category C-Not Required Date PID Prepared/Updated 05-Mar-2014 Date PID Approved/Disclosed 24-Mar-2014 Estimated Date of Appraisal 24-Mar-2014 Completion Estimated Date of Board 15-May-2014 Approval Public Disclosure Copy Decision I. Project Context Country Context Favorable external conditions and domestic policies have fueled sustained economic growth and contributed to poverty and inequality reduction. Driven by high commodity prices and prudent fiscal and monetary policies, Bolivia’s economy had an annual average growth of 4.7 percent during the past nine years, increasing real per capita income by 20 percent. According to official numbers, the national poverty rate in Bolivia declined from 60 percent in 2005 to 45 percent in 2011, while extreme poverty dropped from 37 percent to 21 percent. Income inequality has also decreased significantly with Gini coefficient falling from 0.60 to 0.47. Despite these improvements, the country remains one of the most unequal in the Latin America and Caribbean (LAC) region and continues to lag behind its neighbors and countries with comparable income levels in key social outcomes. Despite these favorable labor market conditions, challenges remain related to high levels of informality and low labor productivity. Bolivian labor market continues to be characterized by high levels of informal and/or non-salaried employment. The level of informality remained high throughout 2000s. Depending on the definition it ranges from about 61 to 66 percent in 2012, which Page 1 of 5 is about 10 percentage points higher than in the neighboring countries, such as Peru and Ecuador. Most workers continue to be employed in small firms (70 percent) and about a quarter of all workers are engaged in non-salaried employment. Informal firms and microenterprises in Bolivia Public Disclosure Copy have been shown to have lower productivity and face constraints to growth. Sectoral and institutional Context Labor market outcomes of youth present a particular concern. Young people in Bolivia, especially from poor backgrounds, due to their low skills and other disadvantages, have limited access to salaried jobs and jobs in the formal sector, as well as opportunities to improve earnings through more productive entrepreneurship. While the educational level of the labor force has been improving in Bolivia (the relative share of workers with low education has declined by almost a fifth between 2000 and 2012), about 30 percent of young people between ages of 18-26 do not complete secondary education. Moreover, youth from poor households have 20 percentage points higher rate of incomplete secondary level than those living in non-poor households. Almost half of the youth in Bolivia are employed, but are involved in primarily unpaid work with limited access to salaried and formal sector jobs. While unemployment rates are slightly higher for youth (17-24 year old) than for other age groups, most of the youth participating in the labor force are employed. However, there are striking differences in the nature of their jobs compared to other age groups and also with respect to their income level. Youth are almost universally involved in the informal sector, and about half of the poor youth are employed as unpaid family workers. Salaried employment for the poor youth represents only 30 percent of all employment. As a result of their low skills and nature of their employment, poor youth have significantly lower labor incomes earning, on average, just one third of what non-poor youth earn and about half or what poor next age group (25-35 years old) earn. Almost a quarter of the youth are not employed or not in school, particularly young women. Public Disclosure Copy Another large group of youth in Bolivia who present a concern for policy makers are those young people who are not working and are not in school (the so called “ninis” for “ni estudian ni trabajan”). Almost a quarter of youth aged 17-24 (24.2 percent) belong to this group and they are primarily young women. Women in this category also have lower educational attainment: less than half have completed secondary education. Youth who are detached from the education system and the workforce in these years may find it particularly hard to fulfill their potential later in life leading to lower productivity and growth. For the above reasons, youth has become a central concern in Bolivia at national and local levels since 2009. If young workers cannot access quality jobs which typically provide at least a minimum wage salary and on-the-job training, they will likely be unable to make significant contributions to economic growth in the medium term. Poor youth have been characterized by a lack of basic and technical skills and lack of experience in the labor market. Despite the fact that a large proportion of them are employed or self-employed, their lack of skills reduces their opportunities to access formal jobs or to increase their earnings. Secondary education certification has become a condition for applicants in the most dynamic urban economic areas, like services. A group of inactive youth can also benefit from opportunities to complete their education which could facilitate their transition to the labor market. II. Proposed Development Objectives Page 2 of 5 The objective of the Project is to improve employability and labor income of poor youth by supporting the expansion of Government skills development programs in selected cities. Public Disclosure Copy III. Project Description Component Name Component 1 – Improving and expanding Government skills development Programs (US$16.4 million IDA) Comments (optional) Component Name Component 2 – Strengthening the implementation arrangements to administer, monitor and evaluate skills development programs. (US$3.6 million IDA; US$0.7 million GOB). Comments (optional) IV. Financing (in USD Million) Total Project Cost: 20.70 Total Bank Financing: 20.00 Financing Gap: 0.00 For Loans/Credits/Others Amount BORROWER/RECIPIENT 0.70 International Development Association (IDA) 20.00 Total 20.70 V. Implementation Institutional and Implementation Arrangements: Public Disclosure Copy The MTEPS is the implementing entity and has the overall responsibility for Project implementation, except the Sub-Component 2.2. Project activities would be manage through the National Coordination Unit (NCU) attached to the General Directorate of Employment (DGE in Spanish) at the MTEPS. The NCU will be also coordinating the activities with the Ministry of Education (ME) and the Departmental Project offices (DPO). Sub Component 2.2, Monitoring and Evaluation Support for training Programs, would be implemented through UDAPE, a decentralized unit in the Ministry of Development Planning (MDP). Except for Sub-component 2.2, Project coordination and day-to-day oversight will be the responsibility of the Coordinator of the NCU. The NCU will receive technical assistance to carry out the following activities: (i) coordinating, planning, monitoring and overseeing the Project in coordination with DPOs or Municipal Governments in the eligible cities; (ii) promoting the Project; (iii) administering and coordinating the provision of technical assistance to strengthen training providers; (iv) contracting the training providers for MPED; (v) administering the payment of stipends to beneficiaries; and (v) contracting the training and technical assistance for micro entrepreneurs. The Project will finance the overall implementation structure of the NCU on a declining basis. MTEPS has an ongoing memorandum of understanding with the ME for the certification of the Page 3 of 5 curricula of training courses of MPED and for the provision of a joint certificate to the Program graduates. For the proposed Project, the MTEPS will extend that memorandum of understanding to include: (i) the certification of the curricula and the provision of certificates for Auxiliary level Public Disclosure Copy technicians (Sub-Component 1.1), and (ii) the provision through its network of Centros de Educación Alternativa (CEAs), the training course of MPED and the remedial secondary education Program (Sub-Component 1.3). At the local level, the Project will operate through the DPOs in the nine department capitals, plus the City of El Alto. The Project will support the strengthening of the DPOs to manage the new training and employment services, expanding the number of technical staff and IT-related items, and financing additional operating cost. The main activities of the DPOs, which are integral part of the SPE offices, are: (i) promoting the program in the cities, (ii) registering applications of young participants and firms, (iii) providing information and orientation to beneficiaries and training providers, and (iv) supervising the training courses in their two phases – in-class and the internships. Local staff of DPOs is also responsible to monthly collect the information registered by the biometric tool, which is installed in each training institution to monitor the participants’ attendance. This information is sent to the NCU through the MIS and supports the stipends payment. In order to implement the project in the five intermediate cities, the MTEPS will reach agreements with Municipal Governments to operate the Project through the municipal employment offices or related areas. As part of the agreement, those municipal offices or areas would at least implement the same activities that the DPOs. NCU will be responsible for centrally contracting and paying the training providers in the fifteen eligible cities. VI. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✖ Natural Habitats OP/BP 4.04 ✖ Public Disclosure Copy Forests OP/BP 4.36 ✖ Pest Management OP 4.09 ✖ Physical Cultural Resources OP/BP 4.11 ✖ Indigenous Peoples OP/BP 4.10 ✖ Involuntary Resettlement OP/BP 4.12 ✖ Safety of Dams OP/BP 4.37 ✖ Projects on International Waterways OP/BP 7.50 ✖ Projects in Disputed Areas OP/BP 7.60 ✖ Comments (optional) VII. Contact point World Bank Contact: Gaston Mariano Blanco Title: Sr Social Protection Specialist Tel: 473-7245 Email: gblanco@worldbank.org Borrower/Client/Recipient Page 4 of 5 Name: Plurinational State of Bolivia Contact: Ministry of Development Planning Title: Public Disclosure Copy Tel: 591-2-2310774 Email: Implementing Agencies Name: Ministry of Labor, Employment and Social Provision Contact: Daniel Santalla Torrez Title: Minister of Labor, Employment and Social Provision Tel: 591-2240-8606 Email: VIII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Public Disclosure Copy Page 5 of 5