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Implementation Completion Report (ICR) Review - Tunisia Employment Dpl


  
1. Project Data:   
ICR Review Date Posted:
08/03/2012   
Country:
Tunisia
Is this review for a Programmatic Series?
 Yes
How many operations were planned for the series?
 2
How many were approved?
 1
Series ID:
S117161
First Project ID:
P117161
Appraisal
Actual
Project Name:
Tunisia Employment Dpl
Project Costs(US $M)
 50  50
L/C Number:
Loan/Credit (US $M)
 50  50
Sector Board:
Social Protection
Cofinancing (US $M)
 0  0
Cofinanciers:
Board Approval Date
  07/01/2010
 
 
Closing Date
06/30/2011 06/30/2011
Sector(s):
Other social services (100%)
Theme(s):
Improving labor markets (88%) Education for the knowledge economy (12%)
         
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Pia Helene Schneider
George T. K. Pitman Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
The proposed programmatic series of two single-tranche Development Policy Loans (DPLs) was designed to support reforms in the first two years of a five-year program in cooperation with the European Commission (EC). The Bank and the EC agreed to jointly support a common policy matrix covering a pro-employment reform program for five years. It was is expected that the first two years would be covered by two single-tranche programmatic DPLs. This project is the first DPL. The second DPL was expected to follow in 2011. The EC then planned to support the program from 2012 to 2014. The two institutions also planned to use the same five -year matrix as the basis for disbursement.

According to the Project Document (p.31) the overall objective for the proposed DPL series would be to improve the effectiveness and efficiency of job entry in Tunisia. Specific objectives of the DPL were:

      1. facilitate employment through Active Labor Market Programs (ALMP),
      2. enhance domestic and international mobility of the labor force; and
      3. strengthen the monitoring, evaluation and dissemination of employment da and mainstream evidence-based policy-making.

Generally, ICRs for a programmatic series are prepared after the closing of the last operation in the series and ratings are issued for the overall program, not by individual operation. In this case the second DPL was cancelled because of the change of government in Tunisia. According to OPCS and IEG guidelines in these circumstances the approved DPL is assessed against the overall series objectives.

b. If this is a single DPL operation (not part of a series), were the project objectives/key associated outcome targets revised during implementation?
No

c. Policy Areas:
(i) Facilitate employment through Active Labor Market Programs (ALMP). Policy actions included measures : (i) to tap new sources of job creation; and (ii) to facilitate employment through well targeted and efficient ALMPs. The Government would launch pilot programs on self-employment and community child care; undertake a restructuring of the ALMP menu of services, including the introduction of modern case management for long-term unemployed; and encourage private sector and NGO involvement in the delivery of employment services.

(ii) Enhance domestic and international mobility of the labor force. Policy actions included: (i) improving labor market dynamics to allow for a restructuring of the production structure; and (ii) moving towards managed migration to benefit from international mobility of the work force. An inter-departmental commission was to be set up to develop terms of reference for a study that would assess the protection system for laid-off workers and formulate options for reform. An international employment division was to be established in the employment agency - ANETI - to provide language and technical training to prospective migrants, and to develop a national qualifications framework.

(iii) Strengthen the monitoring, evaluation and dissemination of employment data and mainstream evidence-based policy-making. Policy actions included: (i) coordinating data production; (ii) harmonizing data nomenclature; (iii) mainstreaming evidence-based policy making. The coordination of data production was to be strengthened by formalizing transmission of data files between public agencies and the National Statistical Institute (INS) and setting up a technical committee to coordinate data production. A revision of the activities and product nomenclature was to be undertaken to accord with UN and EU practices. Benchmarks were chosen to support evidence-based decision-making in employment policy, including setting objectives for a management information system to track vocational training and higher education graduates, and clients of the ALMPs, as they enter the labor market.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates

Project Cost: This single-tranche DPL of $50 million was part of a series to be followed by a second DPL of $50 million in a programmatic approach. Thereafter the European Commission (EC) planned to support the Government reforms with a grant of Euro 60 million.

Financing: The loan was approved on July 2, 2010 and fully disbursed as a single-tranche DPL on January 3, 2011.

Dates: The project disbursed on schedule and the loan closed as planned on June 30, 2011.

Follow-up operation: The Bank together with the interim Government decided in February 2011 to incorporate the planned second DPL of this programmatic series into a World Bank-led multi-sectoral DPL which was to focus on governance and opportunity. This follow-on DPL was approved in June 2011 in the amount of $250 million and was to respond to the new priorities of the interim Government. That DPL is part of larger joint budget support from the African Development Bank, France and the European Union in the total amount of $1.4 billion. The Bank is also providing a non-lending employment TA to assist the government in employment reforms.


3. Relevance of Objectives & Design:

a. Relevance of Objectives:
Modest
The DPL series objective supported the Country Partnership Strategy 2010-2013 pillar 1 which focuses on strengthening the demand for labor and fostering the employability of labor. Each of the three policy areas in the DPL reflects the Government's 11th Development Plan for 2007-2011, which has employment as a key priority.

The objective of improving the effectiveness and efficiency of job entry in Tunisia was and still is relevant given the high unemployment rate, labor market inefficiencies, and weaknesses in the unemployment benefit system, which were and still are highly problematic in Tunisia. However project objectives were too narrowly focused on two elements – stimulating Active Labor Market Programs and migration that benefited mostly the formal sector employees and University graduates, in a context of not enough jobs. However, the Bank diagnostics showed that the unemployment and underemployment situation among low-income groups was more serious. More emphasis needed to be given to issues of unemployment and underemployment among low-income groups on the demand side, the undersupply of technical and vocational skills, fostering job creation, and strengthening governance and accountability. The latter two are important because governance issues were at the core of the inefficiencies in the employment agency and led to patronage under the previous Government.

b. Relevance of Design:
Modest

The design was relevant and appropriate with regard to the objective. A programmatic approach with two single tranche DPL followed by subsequent EC assistance provided continuity to the implemention of the Government's reform program over a longer time period. At the same time, the design was kept flexible, and once the political and economic situation changed in Tunisia, the follow-up 2nd DPL was cancelled and the loan amount incorporated into a much larger DPL.

Previous Bank diagnostics identified several factors in the labor, education and business market that affect employment including (i) oversupply of University graduates and shortages of vocational technicians in the labor market, (ii) rigid employment laws, and (iii) constraints to the expansion of small businesses. However, the DPL program design did not adequately address these weaknesses and related legal changes were too small to have an impact on efficiency and effectiveness of job entry. The design was also labor supply-side focused as requested by the Government, and did not stimulate job creation. The ICR identifies several entry barriers, such as labor market regulations that reduce market flexibility, overinflated entry level salaries of University graduates and centralized wage setting; however the DPL did not address these constraints. There was a modest focus on low-skilled labor by changing regulations that would help to formalize the informal sector. DPL2 had planned mobile units to reach the low-skilled in the interior of the country with job search assistance. The results framework of the DPL series was weak and did not provide the relevant indicators to assess overall objectives of efficiency and effectiveness.


4. Achievement of Objectives (Efficacy) :

Objective 1: Improve the efficiency of job entry in Tunisia - Modest

  • No information is available on the cost-effectiveness of the employment agency and other job entry support programs or on the fiscal impact of job entry programs. The impact analysis does not report cost and cost-effectiveness of the business plan thesis program for University graduates.
  • The public employment agency eliminated redundant programs, improved targeting of beneficiaries and at the same time hired a large number of employment advisors.
  • The public employment agency restructured its Active Labor Market Programs and reduced the number of programs from 20 to 7 with conditions of access specified. Support is conditional on the beneficiary's job-seeking efforts.
  • The public employment agency has computerized files of employment seekers. Advances were made in data access and harmonization. The national statistic institute is working with partners to make information from surveys available to the public.
  • The National Statistics Institute and the National Observatory for Employment did not adopt work plans to apply new nomenclature. Strikes delayed this process.
  • The number of conventions to transfer files between public agencies increased from a baseline of 0 formal and 5 informal, to 2 formal and 6 informal conventions in December 2011, moving towards the target of 7 formal conventions
  • The public employment agency rate of filling firms' job offers posted in a given year did not increase. From a baseline of 81% it declined to 33% by December 2011 instead of increasing towards the target of 85% set for June 2012.
  • Placement contracts for higher education take-up by graduates and employers did not increase. From a baseline of 2,387, it declined to 1,018 in Dec. 2011 instead of increasing towards the target of 5,000 set for June 2012.
  • Professional placement contracts take-up by non-graduates and employers increased substantially. From a baseline of 16,206, it increased to 37,629 in Dec. 2011 surpassing the target of 20,000 set for June 2012
  • Registration of all job seekers through the public employment agency increased from a baseline of 21% to 25.3% in Nov 2011 which is below the target of 35% set for June 2012.
  • The increase in the share of the public employment agency’s budget for Active Labor Market Programs delivered through private and third sectors is not reported: The baseline was 5% and the target 10%. Actual is not available. The ICR reports that private sector intermediaries would have been against the Labor Code and was not supported by the unions; however it was supported under the 4th prior action, (ICR, p. 13).
  • Coverage for laid-off workers by the safety net almost doubled from a baseline of 5.58% in Dec 2009 to 9.78% in Nov 2011. No target was set.

Objective 2: Improve the effectiveness of job entry in Tunisia - Modest
  • The public employment agency established the international employment division. The number of international contracts facilitated by the division increased substantially from a baseline of 69 contracts in Nov 2010 to 1,821 regular and 999 seasonal contracts in Dec 2011. No target was set. Previously, individuals were finding work by themselves, and now search costs are reduced because the agency is facilitating contracts. This increase also reflects improved reporting in the number of contracts, which previously were not tracked.
  • The quota migrating to France increased from a baseline of 16% in Dec 2009 to 31% in January 2011 moving substantially towards the target of 40% set for June 2012.
  • The number of CVs sent to employers/employment agencies abroad was not measured. The baseline was 1,000 and the target 2,500.
  • The proportion of training centers providing degrees was not measured. The baseline was 33% and target 40%.
  • The percent of university students enrolled in the business plan thesis program who were employed for at least 1 year after the program rose from a baseline of 0% to 28% by June 2011, against a target of 65% of graduates by June 2012. An impact evaluation found that the program training offered to about 800 university students led to a 3 percentage point increase in their probability to be self-employed (about 24 additional self-employed) from a baseline of 4 percent. The training affected neither students’ probability of finding a job nor their earnings (Brodmann 2012).
  • The employment effect of the measures supported cannot be discerned from the evidence presented in the ICR. Long-term unemployment (>24 months) increased from a baseline of 14.5% in Nov 2009 to 16.5% in Nov 2011, instead of decreasing towards the target of 12.8% set for June 2012. However, during times of economic and political crisis, long-term unemployment rates generally increase.

5. Efficiency (not applicable to DPLs):

6. Outcome:

The outcome is rated Unsatisfactory based on modest relevance of objective, modest relevance of design, and modest achievement of two objectives.

a. Outcome Rating: Unsatisfactory

7. Rationale for Risk to Development Outcome Rating:

Elections took place on October 23, 2011 and the new Government took office. There are still substantial risks to the development outcomes of improved effectiveness and efficiency in job entry, related to possible renewed political instability caused by increasing unemployment rates, the uncertainty of the economic outlook given the economic and political situation in the region (e.g. Egypt and Libya), and the slow global recovery from the economic crisis. Uncertainty about the new leadership has led many domestic and foreign investors to adopt a wait-and-see approach. However, the new authorities recognize labor market concerns as driving factors and receive now important support from the Bank and the European Governments. The situation is changing since the new Government took office in October 2011 (after the loan closed), and the new Government is actively addressing employment reforms with the support of the Bank and other donors.

a. Risk to Development Outcome Rating: Significant

8. Assessment of Bank Performance:

a. Quality at entry:
The Bank team carried out ample analytical work to inform the design of the DPL. It would have also helped to have a solid political-economic analysis to better understand the constraints and frustrations of the workers and employers in Tunisia. The Bank collaborated with other donors to prepare a longer-term joint budget support program, which was expected to result in greater commitment by the Government for the reforms.
The team designed the DPL to support gradual reform steps to build up momentum for reforms. However, given that the diagnostic results were available and the unemployment situation was serious, the Bank could have taken a bolder approach in designing the DPL program and address issues of unemployment and underemployment of low-income groups, undersupply of technical and vocational skills, foster job creation, and strengthen governance and accountability. Instead, reforms were targeted to University graduates and formal sector employees, and the focus was on smoothing school-to-work transition in a context with not enough jobs.
The Bank team pushed for a broader approach and inclusion of further sectors and ministries in the DPL, which was not an option for the borrower, leaving the Bank to either stay engaged with this DPL or dropping the operation at identification.

The Bank underestimated the seriousness of the socio-economic, political, and governance situation in Tunisia and the lack of Government commitment to reforms, perhaps because access to information on the situation was very constrained, and the Minister of Cooperation was the main Bank counterpart. He was not from the establishment and remained in the interim Government.

The Program Document underestimated the likelihood that political changes may occur. The Program Document identified 4 moderate to high risks. The political risk was estimated as High due to the Government's unwillingness to undertake necessary reforms, and possible protests by University graduates. The Macro risk was estimated as moderate during the global economic crisis; and the institutional risk as medium to high because of lengthy administrative procedures, insufficient cross-institution collaboration, and changes in high level staff, which could affect ownership. The ICR describes the Bank's risk analysis as less than fully adequate.

Quality-at-Entry Rating: Moderately Satisfactory

b. Quality of supervision:
The Bank team conducted several supervision missions between Nov 2010 and September 2011. There was a mission freeze during the revolution. The Bank disbursed the DPL during the times of political and social unrest and just before the Government was toppled. Thereafter, the Bank together with the new interim Government proactively identified the need to change course and incorporate the planned second DPL into the new multi-sectoral DPL which is currently under implemention. Reforms introduced under the DPL involved institutional strengthening at the public employment agency and the national statistics institute. However, the DPL provided limited TA partly financed by the Bank and by other donors.


Bank Management did not foresee that the revolution in December 2011 would have the impact that it did. The decision to disburse must have been taken before December 31, and actual disbursement occurred on January 3, 2012.

Quality of Supervision Rating: Moderately Satisfactory

Overall Bank Performance Rating: Moderately Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
The Ministry of Development and International Cooperation was in charge of program implementation. The ICR describes Government ownership for reforms as lukewarm. The former Government wanted to introduce reforms in a sensitive policy area, but did not want to challenge the relationships between unions and employers. The former Government did consult with stakeholders in 2008 when developing the reform agenda (ICR p. 7). However, during the ICR mission, most interlocutors complained about insufficient consultion about the reform program (ICR p. 20). Rather, the existing rent-seeking system was supported which was stifling entrepreneurship and job creation. The Government wanted a sector-specific DPL to focus on labor only and not involve job creation and business climate work, because this has been supported by previous projects.

The government requested to limit the DPL on a single sector (employment) and within that, on the competencies within the reach of the Ministry of Employment and Professional Insertion of Youth (MEPI). MEPI can influence the programs and actions of its Employment Agency ANETI, and relevant laws, but it cannot influence labor code legislation and legislation relevant to the education system or the private sector.

The political risk materialized and was triggered by the large number of underemployed low-skilled workers in the informal sector who were harassed by Government administrative procedures and through corruption. There were previous protests by students, however these were always suppressed and kept silent. Nobody was really fully informed about what was going on. After the revolution, the new government requested broad Bank support on all sectors, including those not previously supported by the Bank.

Government Performance Rating: Unsatisfactory

b. Implementing Agency Performance:
The public employment agency and the statistics institute were program implementation agencies. The ICR suggests that given the circumstances, the implementing agencies did their best to carry out their activities and introduce changes. The public employment agency introduced case-management and mobile units in underprivileged areas, but it has not improved its capacity to visit firms and register vacancies.

Implementing Agency Performance Rating: Moderately Satisfactory

Overall Borrower Performance Rating: Moderately Unsatisfactory

10. M&E Design, Implementation, & Utilization:

a. M&E Design:
The M&E design did not clearly link the effect of the priority actions under the three policy areas to the two overall objectives of improved efficiency and effectiveness of job entry. Some indicators were too ambitious, and it was not clear how the DPL reform program would have affected them (e.g. decrease long-term unemployment rate). The Program Document did not specify how the M&E framework was to be implemented and who was to collect the relevant data.

b. M&E Implementation:
Baseline data were collected for most indicators, as well as intermediate outcome indicators that were partially attributable to the reform program supported by the loan. No information was collected on the employment effect and efficiency of the job entry program as well as on the fiscal impact. Despite the political changes and mission freeze for the Bank staff, the M&E framework was implemented. An impact evaluation was conducted on the Business Plan Thesis program for University graduates. Data for June 2012 was not collected as the 2nd tranche was cancelled.

a. M&E Utilization:
The third policy area supported M&E at the public employment agency but mainly focused on data collection. It is not clear how M&E data and results from analysis are being used.

M&E Quality Rating: Modest

11. Other Issues:

a. Safeguards:
No safeguards were triggered.

b. Fiduciary Compliance:
This DPL series was disbursed as overall budget support.

c. Unintended Impacts (positive or negative):
None

d. Other:



12. Ratings:

ICR
IEG Review
Reason for Disagreement/Comments
Outcome:
Moderately Unsatisfactory
Unsatisfactory
Relevance of the objectives, relevance of design, and achievement of both objectives was modest. These amount to major shortcomings, and thus an unsatisfactory outcome according to the harmonized evaluation criteria, 
Risk to Development Outcome:
Moderate
Significant
The Bank underestimated the risk to development outcomes at entry. Given the slow recovery and the uncertain situation in the region, the risk to the development outcome remains significant. 
Bank Performance:
Satisfactory
Moderately Satisfactory
The Bank prepared and supervised a program that was too modest and not bold enough given the seriousness of the situation in Tunisia. The program mainly focused on job entry in a context with not enough jobs. 
Borrower Performance:
Satisfactory
Moderately Unsatisfactory
The previous Government as hardly interested in the reform and mainly used the DPL program to maintain its status instead of supporting the needs of the large population active in the informal sector.  
Quality of ICR:
 
Satisfactory
 
NOTES:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

13. Lessons:
The following lessons are drawn from the ICR:

  • Solid political-economic analysis in DPLs, which tackle difficult reforms such as in the labor sector, are essential to better understand the constraints caused by embedded political interests and corruption. In countries with favoritism and rent-seeking, this would include issues of governance and accountability.
  • Operations that seek to improve the efficiency and effectiveness of job entry would require measures to ensure the jobs are there to be entered. Otherwise they will not be effective.
  • Employment programs are regressive if they focus on University graduates who are a small and privileged population group. Better outcomes may result from improving the work and business environment for the large number of low-income workers active in the informal sector and in agriculture.

14. Assessment Recommended?

No

15. Comments on Quality of ICR:

The ICR is well written and gives a good overview and description of the situation. It provides good quality of evidence and of analysis, and is consistent internally and with OPCS guidelines.

a. Quality of ICR Rating: Satisfactory

(ICRR-Rev6DPL-Jun-2011)
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