World Bank Documentdocuments.worldbank.org/curated/en/126171468123886510/pdf/multi0... · extending the coverage of the pilot in-service tiaining program (Multiple Support Service

Document 'Of

The World Bank

FOR OMCLAL USE ONl

MICROFICHE COPY

Report No. :P- 5869 ME Type: (PM)Title: LABOR MARKET ANND PRODUCTIVITY IAuthor: RIBOUD, M Rqprl w P-5869-IEExt.:39250 Room:I 7125 Dept.:LA2HR

MMORADM ANID RECOMMENDATION

OF THE

PRESIDENT OF THE

ITENATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMT

TO THE

EXECUTIVE DIRECTORS

ON A PROPOSED LOAM

IN TE AMOuNT EQuivALE TO US$174 MILLION

TO NACION,L FIltANCIERA, S.N.C.

WITR THE GUARNTEE OF TE UTNITED MEXICAN STATES

FOR A

LBOR MARKET AND PRODUCTIVITY ENHANCEMENT PROJECT

* NOVMBNER 23, 1992

This documel* Oas a restricted distributon and may be used by recpients only in the performance oftdeir oficial duties& Its contents may not othrwie be disclosed without World Bank authorization.

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CRJRENCY EOUl S

Currency Unit Peso (Mex$)US$1.00 = 3,112 Pesos (July 1992)

MCALlEAR

January 1 - December 31

UNITS OF WEGHTS AND MEASURES

Metric US/British Equivalent1 kilogram (kg) = 2.20 pounds (lb)1 metric ton (m ton) = 2,250 pounds1 liter ) = 0.26 gallons (gal)I kilometer (kIn) = 0.625 miles

GLOSSARY OF ACRONYMS

dMO Multiple Support Service Program to MSMEs (Programa de CaUdadIntegral y Modernizaci6n)

CONALEP National System for Vocational and Technical Education (ColegioNaconal de Educaci6n Tdcnica Profesionat)

INEA National Institute for Adult Education (Instituto Nacional de Educaci6npara Adultos)

INEGI National Institute of Statistics (Instiuto Nacional de Estadistica, Geograf(ae Jnfordneica)

MSMEs Micro, Small and Medium sized EnterprisesNAFTA North American Free Trade AgreementNAFIN National Financing Company (Nacional Financiera, S.N.GC)

PROBECAT Labor Retraining Program (Programa de Becas de Capacitaci6n paraTrabajadores)

SECOFI Secretariat of Commerce and Industrial Development (Secretarfa deComerclo y Fomento Industrial)

SEE State Employment Service (Seruicio Estatal de Empleo)SHCP Secretariat of Finance and Public Credit (Secretarta de Hacienda y

Credito Pablico)STPS Secretariat of Labor and Social Welfare (Secretarta del Trabayo y

Previsi6n Social)UPC Regional Productivity Support Unit (Unidad Promotora de

Competitivida)

FOR OMFCL USE ONLY

AMCO

LABOR MR AND YRODUCTIII ENHANCMEN ioE

LOAN AND PROJECT SlUMMARY

Borram: Nacional Financlera, S.N.C. (NAFIN)

Gaa*nSr: United Mexican States

Secretariat of Labor and Social Welfare (STPS)

Becdiduies: Entrepreneurs and employees of micro, small and medium sizm enterprises,enterprise associations, unemployed and displaced male and fenialeworkers, and rural migrants.

Amount~: US$174 million equivalent

=Terms: Repayment in 15 years, including 5 years of grace at the standard variableinterest rate

Local Foreign Total

-US$ million-

Federal Government 114.9 0.0 114.9State Governments 18.0 0.0 18.0Private Enterprises 49.0 0.0 49.0IBRD 159.9 14.1 174.0

Total Financing 341.8 14.1

Eoonougc Rkor Retum: Not Applicable

SlE-l Appad Rlot:Report No. 11095-ME; dated November 23, 1992

Mu., IBRD No. 24094

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization

MIMORANDUM AND RECOMMENDATION OF TH PRESIDENT OF THE IBRDTO THE EXECIVE DnECORS

ON A PROPOSED LOAN TO NACIONAL FANCMEA, S.N.C. WITH THE GUARANTEOF THE UNIM MXCAN SATES FOR A

LABOR MARKEr AND PRODUClIVITY ENEHANCEMENT PROJECT

1. I submit for your approval the following memorandum and recommendation on a proposedloan to Nacional Financiera, S.N.C. (NAFIN), with the guarantee of the United Mecan States, forUS$174.0 million equivalent to help finance a project for Labor Market and ProduativityEnhancement. The loan would be at the Bank's standard variable interest rate, with a maturity of 15years, including five years of grace. NAFIN would be the Borrower and the Secretariat of Labor a.dSocial Welfare (STPS) would be the executing agency.

2. RaftmwW. The Government's success in stabilizing, liberalizing and privaizing theeconomy in recent years has set the stage for long-term economic development. However, prospectsfor sustained private sector-led growth remain constramed by several long-standing labor marketissues. First among these is Mexico's low rate of labor productivity growth, which limits theinternational competitiveness of its producers and the potential for improvements in the livingstandards of workers. Low labor productivity growth, especially prevalent among micro, small andmedium sized enterprises (MSMEs), is linked to insufficient levels of on-the-job human capitalaccumlation and to a limited capacity to adopt new production processes and technologies. A secondissue is employment instability for a significant portion of the population, which results in lower on-th-job training and, thus, reduced earnings opportunities. A third concern is a possible increase inrural migration flows and unemployment resulting from the acceleration of the economic resuctuingprocess expected from the North American Free Trade Agreement (NAFTA). Address;ng theseissues will require policies aimed at increasing the productivity of Mexican workers, facilitating thetransformation of production processes and the adoption of new technologies, and improving the flowof labor between expan6ing and contrctig sectors and regions. These policies, which emphasizepost-school accumulaion of human capital, would complement efforts aimed at increasing the generaleducational level of the population. However, at present, effective policy design and implementationis impeded by limitations of existing data and &;te lack of analysis of labor market issues.

3. Recognizing the importance of these problems, the Mexican Government is now givinghighest priority to the development of human resources th'ough investments in human capital, bothbefore and after entry into the labor market. It is also making major efforts to reduce the cost oflabor mobility and facilitate labor market adjustment. Recent policy documents expanding on theNational Development Plan 1989-94 reflect the strong commiment of the Government to build upMexico's human capital in the context of a free-market oriented str. The Secretariat of Laborand Social Welfare (STPS)-by law, the leading institution in matters related to employment, labormarket regulations, inservice training, productivity, and working conditions-is ffie exetig agencyfor the National Traning and Productivity Program 1990-94, intended to: (a) support private sector-led growth by increasing the skills of the labor force, promoting productivity improvements andfaciltating labor mobility; and (b) broaden the basis for growth through a wider distribution ofincome-generting opportunities within the population. The importance attached to increases inproductivity and competitiveness in light of NAFTA is also reflected in the National Agreement forInceased Oualt and Prod cti signed in May, 1992 by the Government and representatives ofbusiness and labor, which aims to modify traditional forms of organization and management,including promotion and wage schemes to reward individual performance and foster productivitygrowth. Over time, the Government intends to concentae on a technical assistance and policyformulation role in labor markets as privae enterprises sharply increase their contributions to training

costs. The Government has prepared a sector policy statement in support of the proposed project andthe policy changes it embodies.

4. Proect O ives. The proposed project would assist the Government of Mexico inpromoting private sector-led growth and in easing the costs of labor mobility and labor marketadjustment by: (i) increuing the productivity and competitiveness of MSMEs; (ii) reducing costsincurred by employees and employers of hiring and job search, providing education and trainingopportunities for displaced and unemployed workers, with special attention to women; and (iii)improving the availability, timeliness and dissemination of labor market information and, morebroadly, the capacity to monitor labor market changes and to design, evaluate and implement relevantpolicies and programs in the sector.

5. j l. The proposed project would consist of three major components: (a)the Productivity Enhancement Component (28% of total project cost including contingencies) wouldsupport activities aimed at increasing the productivity and competitiveness of MSMEs by: (i)extending the coverage of the pilot in-service tiaining program (Multiple Support Service Program toMSMEs, CIMO) initiated under the Manpower Training Project (La. 2876-ME, 1987) and expandingthe scope of support services provided to MSMEs; (ii) strengthening coordination between CIMO andother instiuons rendering -upport to MSMEs; and (iii) promoting the gradusA privatization of CIMOby increasing the involvement of enterprise associations in its financirg and operation and the gradualransformation of Regional Productivity Support Units (UPCs); (b) the Labor Market Adjustment5omponent (61% of total project cost) would improve the coverage and efficiency of StateEmployment Services (SEEs) and provide education and training opporities for displaced workers,through: (i) strengthening the operation and management of the SEEs, and improving the quality andavailability of information on local and regional labor markets; (ii) providing improved retrainingprograms for approximately 300,000 displaced and unemployed workers meeting stringent selectioncriteria; and (iii) intoducing, on a pilot basis, an education and trainig program for underqualifiedrural migrants who are ineligible for rvegular retraining; and (c) the Information. Policy andInstixtiona Strnhein Mg (11% of total pro;ct cost) would improve the availability,timeliness and dissemination of labor market information, and strengthen institutional capacity todesign, operate and evaluate labor market policies and proprams, including: (i) supporting thedevelopment of an information system and the undertking of inAepth surveys to provide the basis forperiodic and systematic labor market data generation and analysis; (ii) promoting an extensiveprogram of studies and research on labor market issues, programs and policies; (iii) fostering regularpublication and dissemination of labor market information; (iv) instituting a systematic framework forprogram evaluation; and (v) stengthening STPS's management and teh capacity through humanresource development and modernization of its data management system.

6. The total project cost is estimated at US$355.9 million equivalent, including taxes and duties(estimated at US$8.1 million), with a foreign exchange component of US$14.1 million equivalent. Abreakdown of costs and the financing plan are shown in Schedule A. Amounts and methods ofprocurement and of disbursement, and the disburement schedule are shown in Schedule B.Retroactive financing of US$11.0 million equivalent would be granted for expenditures on keyactvities of the productivity enhancement and labor market adjustment components icurred after July1, 1992 to avoid interruption of tehnica support to enterprises and of the training of unemployed anddisplaced workers between the loan closing of the existing Manpower Training Project andeffectveness of the proposed project. A timetable of key processing events and the status of BankGroup operaions in Mexico are given in Schedules C and D, respectively. The Staff AppraisalReport No. 11095-ME dated November 23, 1992, is being distributed separately.

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7. Project nMlementation. The project would be implemented over a five-year period (1993-97)by STPS, asisted by NAFIN, under management arragement similar to those used for theManpower Training Project, selectively strengtened as justified by the experience of the operation.The project organization would have two levels: the central level, represented by STPS, which wouldhave overall responsibility for project coordination and implementtion; and the local level throughthe SEEs and the regional MSME support units, which would be responsible for the implementationand delivery of services to unemployed workers and enterprises. These arrangements have proven tobe highly conducive to effective and efficient project implementation under the previous project.

8. Poect Sustainability. The project aims to develop self-sustaining 'inancing and implementingcapabilities for human capital investments in enterprises through a growing involvement of privatesector organizations. It also aWms at developing more flexible labor markets and more effectiveGovernment assistance to firms, individuals and training providers, without increasing permanentSTPS staff. Sustainaility of the retraining program would be encouraged by providing proceeds ofthe Bank loan on a declining basis. Strong monitoring and evaluation systems and a substantialprogram of studies would underpin improved govermnent policies and further strengthen the long-term sustainability of expected project achievements.

9. Lessons Learned from Previou Bank Ivolvement. Lessons learned during theimplementation of the CONALEP I and II and Manpower Training projects (Lns. 2042-ME in 1981,2559-ME in 1985, and 2876-ME in 1987, respectively), as well as training sector experience Bank-wide, have been incorporated into the proposed project's design: (i) it supports sector policies andstrategies th seek to strengthen the links between private enterprises and public institutions. Formalinstitutional arrange are also in place to encourage private sector training and involve industrialbusiness associations in program activities; (ii) it includes cost-sharing arrangements that proved to besuccessful between the GCovernment and enterprises for in-service training of workers; (iii) it takesinto account the results -he evaluation of the labor retraining program supported under theManpower Training Project to improve the design of the new retraining program, and selectioncnteria for program paiticipation were modified to target those for whom the program was found tobe most cost-effective; (iv) it includes monitoring mechanisms and formal evaluations of the retrainingprogram and of the MSME support program, based on comparisons with control groups; (v) it wasdesigned by an experienced team that successfully managed the Manpower Training Project, takinginto account their experiences with the first operation and the results of its mid-term review; and (vi)it places emphasis on institution-building to improve policy-making capacity.

10. Rationale for Bank Involvement. The proposed project's objectives are fully consistent withthe Bank's country assistance strategy to support the shift in the Government's focus toward long-rundevelopment issues, and provide support to private sector-led growth through the provision of socialinfrastructre and a well-structured set of incentives. By supporting productivity enhancementactivities in the labor market, the project would contribute to human resource development, which iskey for long-term growth and poverty alleviation. By improving the efficiency in the use of publicresources and by inducing an increased involvement of the private sector in training activities, theproject would support the Government's efforts to rationalize the role of the public sector andpromote private sector-led growth. By targeting specific actions to more vulnerable socio-economicgroups, the project would also promote social mobility and a more equal distribution of the gainsfrom economic reform. The project would be justified on economic efficiency and equity grounds.Ihe Government has been showing increasing interest in involving the Bank more closely in policyand program development in the human resource sector. Follhwvng the good experience of theCONALEP I, CONALEP II and Manpower Training project, the Bank has been expanding itssupport to human capital development in Mexico through the Basic Health, CONALEP m, PrimaryEducation, and Science and Technology projects (Lns. 3272-ME in 1991, 3358-ME in 1991, 3407-

4 -

M In 1992, and 3475-ME in 1992, respecvely), and trough the recently signed Initial EducationProject (Lu. 3518-ME). The Bank S the only aid agency in Mexico involved in large-scale numanresource development prograns and would be able to transfer to Mexico leSons learned Crom Bankexence in other countries. Future Bank sate for Mexico aims at supportng private sector-ledgrowth. An important element of this is ensuring that an adequately educated and trained labor forceexists to take advantage of economic opportunites and that labor displaced as a result of economiccne can be re-absorbed into more productive activities at minimal human cost.

11. Isues ad Aco. During a=9W= the Government and the Bank reached agreementon: (a) a final statement of sector policies; (b) modalities for collaboration between STPS, NAFINand the Secretatiat of Comrierce and Industrial Development (SECOFI) in providing servces toMSMEs; (c) the presentation to the Bank by June 30, 1993 of: (i) satisfactory guidelines for thework incentive scheme for SEE staff; and (ii) satisfatry revued operational manuals for the SEES;(d) the guidelines for the operation of the pilot Basic Education and Training Program forinexperienced workers; (e) the submission of the set of short, medium, and long-term statics to beused for labor market monitoring that would be updated and published regularly, satisfactory to theBank, by April 30, 1993; (f) annual project reviews, to be held in November of each year, conductedjoindy by STPS, the Secrtat of PRnance and Public Credit (SHCP), NAFIN and the Bank,progress reports for which would include proposed budgetary requirements for project implmentionfor the subsequent year; (g) the mid-term review, to be held in November 1995, conducted jointly bySTPS, SHCP, NAFIN and the Bank, including the preparation and initiation of an action plan,satisfctory tj the Bank, by December 31, 1995; (hi) on terms of reference, schedules, and actionplans ps neetied, for: (i) evaluatiors of the Labor Retrining Program for displaced workers; (ii)evaluadons of the CIM0 program; (Oii) an evaluation of the pilot Basic Pducation and TrainingProgram by May 31, 1994; and (IV) all the studies and surveys to be conducted under the project.

12. The conditions of disb_ ni are: (a) for the financing of mobile employment units, thepresentation of an evaluation, satfory to the Bank, of the experience with the six pilot unitsswported under the Manpower Trainng project; and (b) for the work incemive scheme for SEE staff,prsentation of guidelines, wdsatctory to the Bank, for the operation of said scheme.

13. An event of suspension of disbursements for the retraining program for the unemployedbeyond US$25.0 million would arise if: (1) the Government fils to present to the Bank, within 60days of the time such amount is reached, a satisfctory evaluation ta: (a) measures the impact ofaltenative training programs and delivery systems on the employment and earnigs of the trainees;(b) identifies possible improvements in program targeting; and (c) assesses the cost-effctiveness ofthe program and is different modalities; and (ii) the Government falls to present a plan of acdon,the to the Bank, for improving such retraining program in a manner that takes into accountthe results of the evaluation. The timetable for the completion of the evaluation and agreed actionplan i8 by March 31, 1995. lnter alia, the number of trainees would not exceed 55,000 per amnnuuntil such satisfactory evaluation has been completed.

14. -dVvirownens Aspects. The project (Category C) would have no direct emnronmental effects.

15. Pmg g Qbjtive Ctabgrie. The project would contribute to Mexico's poverty all:.Iiationstategy through its assistance to rural migrants and unemployed workers (a large fraction of whomare women).

16. .oect Benft h e project supports the Government's efforts to promote private sectorledgrowth and eae the costs of labor mobility. The project would increase productvity andcompetiveness in MSMEs, creating higer eanings and employment opportunities for Meican

workers. About 35,000 enterprises, employing about one million worker, are expected to bifreached. Project benefits, however, would extend beyond the participating enteprses, as the projectis itended to have an important demonstation effect. Through the increased involvement of privateenterprises in MSME support programs and the promotion of doser interw-institudonal links, theproject would also foster improvements in the quality of training services supplied to enterprises and afaster rate of adoption of new technologies through the provision of a better trined labor force. Thelabor market adjustment process would be eased as the improved quality of sevices provided tounemployed and displaced workers would reduce the costs of hiring and job search, improve the jobmatching process and thus provide better opportaities for employment stability and subsequent wagegrowi. Approximately two million unemployed workers are expected to benefit from placementservices over the life of the prqposed project. About 300,000 unemployed workers whose cuentskills fall to match those in demand would also benefit from the training to be provided. The cost-effdctiveness of the retraining programs will be enhanced by targeting the training to those groupswhere evaluation has demonstrated the highest rates of reurn to such training (workers with at leastcompleted primary education and some work experience). Th. results of an evaluation of trainingprograms under the Manpower Training Project showed a 20-30% monthly salary increase for maletrainees with some prior work experience. For male target trainees, the evaluation showed thatbenefits of program participation outweigh the costs of the program within three months of startingeMloyment. For younger inexperi workers and rural migrants, the project is expected toimprove their entry conditions in the urban labor market. In add:ion to sharing the general benefitsOf the project listed above, women would benefit from the improvements to be introduced in theraining programs and reduction of labor market barriers which hamper the realization of the fullbenefits of training by females. Finally, the project would enhance the Government's capacity todesign, monitor and evaluate labor market policies and programs, thus contributing to a more efficientuse of public resources.

17. Riaka. The main risks are: (a) a possible decline in Government commitment to projectobjectives after the change m adminison in 1994. This risk is small given the exitng strongsupport for current economic policies and the importance given to productivity and mobility issues inlight of NAFTA; (b) insufficient budgetary allocations to guaratee program sustainability beyondproject completion. This risk will be minimized by the coverage of trainee stipends and recrrentcosts on a declining basis, by incased private sector participation in the financing and operation ofthe CIMO program, and by rigorous monitormg of budgetary allocations during the annual projectimplementation reviews; (c) slower than expected acceptance by enterprises of the productivity

actions. This risk seems quite small given growing support by private entprises ofinbterventions initiated under the ongoing Bak-supported MaWower Training Project and will befurther mitigated by strengthened program management and availability of services; and (d) projectcomplexity and the fact that there are many implementing agencies at different levels may limit theAchievement of the project's objectives. This risk will be mitigated through the early identificationand resolution of any problems which develop through close supervision and through the mid-termand anual project reviews.

18. 'Recommendation. I am satsfied that the proposed loan would comply with the Articles ofAgreement of the Bank and recommend that the Executive Directors approve it.

Lewis T. PrestonPresident

AtahmensWashington, D.C.November 23, 1992

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Page 1 of 1

E8MTED ELI cm

ProJectqb ~~~~~~~~~~Local Forefr Total-.-- US$ million-

Labor Market A _j0ment 191.9 6.5 198.4Strengthening of SEEs 36.6 1.1 37.7Reaing Program 155.3 5.4 160.7

Infenndon, Policy and

Labor Market lnormation System 15.8 3.3 19.1Institutional Stengthening 14.7 0.7 15.4

TOTAL BASE COST M 123 3221

Physice Con6tgencies 1.3 0.6 1.9Price Continencies 30.7 1.2 31.9

ToTAL PROJECT COSTr' 3au. 14.1 35

tlDalcing_l1l4 I~~~~LoAlY Foreg Total-US$ miflion

Federal Government 114.9 0.0 114.9state Governments 18.0 0.0 18.0Private EtIeprses 49.0 0.0 49.0EBRD 159.9 14.1 174.0

TOTAL 341.8 14.1 35.

Ffm Dbhmamsu Bank Fisa Year(n US$ millions)

1993 1994 1995 1996 1997 1998A nual -6.-10 28.0 40.0 40.0 32.0 18.0Cumulative 16.0 44.0 84.0 124.0 156.0 174.0

Economic Rate of Return: Not Applicable

I/ nclds tat. of about US$8.1 nillio

21 Inclde Specl Account deposit of US$12.0 million aw up to US$11.0 million of retractive finnwi for eliile.zedire incutred after July 1, 1992.

7 -

ScheduleBPage 1 of 2

hnm~

LAB9S MARKT AND PROIYJCTJVITY ENHANCEMENT PROJECT

PROCUREMENT ARRANGEMENTS(US$ millions)

Procurement Method Total

Project Element ICB LCB Other N.B.F Cost

1. WORKS

1.4 / 1.41.1 Minor office vehablitaton (1.3) (1.3)

2. GOODS

2.1 Equipment and mobile units 14.0 2.0 1.2 W 17.2(14.0) (1.7) (1.0) (16.7)

2.2 Publications and printed materials 1.4 h/ 1.4(1.3) (1.3)

3. CONSULTANCIES

3.1 Publicity canWaigns 4.3 g/ 4.3(3.9) (3.9)

3.2 Sbadies, surveys, and locai and 24.1 _ 24.1foreign technical asistnc (21.7) (21.7)

3.3 Specialized astance to enterprises 93.1/dt 93..and training for unemployed (50.1) (50.1)

3.4 Staff training 6.0 _e/_ 6.0(6.0) (6.0)

4. MISCELLANEOUS

4.1 Stipends for trainees 140W;d/ 140.8(42.2) (42.2)

4.2 Staff incentives, travel and 49.7 _d 18.0 67.7inctemental operatg costs (30.8) (0.0) (30.8)

14.0 2.0 321.9 18.0 355.9TOTAL (14.0) (1.7) (158.3) (0.0) (174.0)

Not: Figures in paenth we ahe respcivo amounts financed by the Bank loan.N.B.F.: Not Bank-Financed.a Lca shopping obaining quotaions fiom at least thre suppliers.hi Local shopping and/or &rec contracting.S/ Cosulants and other smrvieo conacts proctred ki accordance with World Bank. Guidelines: Use of C emultan& by World Bank

Bwowers and by the Wold Bawk aw Exe*ang Agency (WashinWon, DC, August 1981).I Does not involve procurement.gf US$2.0 million, for intea training, does not involve procuremet.

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Page 2 of 2

LABRM MARM; AMI POItUCrl\VrrY ENHANEMIENT PROJEC

WITHDRAWALS OF THE PROCEEDS OF THE LOAN

Amunmt of theCa0g Low Allocad % of Expenditues

(expressed in to be finceodUS$ equivalent)

1. Equipment 15,000,000 100% of forign expnditue., 100% of localexpenditures (ex-1actM cost) and 90% of localexpenditures for other item pdro d localy,excluding taxes

2. Office Rehabilitation 1,200,000 90%3. Technical Assistance and

Trainga. Studies, surveys, local 2S,,000,000 100%, excluding taxes

& fign TA, staff andconsultant training

b. Fixed-term temporary 18,000,000 100% until the aggregt rhes US$4.5 million,staff 80% until the aggregate reaches US$14.0 milion,

40% until the aggregAe reaes US$16.0 million, and25% for the remainder

c. Training of trinr 3,500,000 70%d. I-vice taining of 11,000,000 35% until the aggregate reaches US$4.5 million,

workers and sueviso 25% until the aggreae reaches US$9.5 million, and15% for the remainder

o. TA to entpiss 5,000,000 70% until the aggregate reaces US$1.7 million,60% until the aggregate reaches US$3.0 million,50% untl the aggregate reaches US$4.0 million, and40% for the _mainder

4. Stipends 38,000,000 55% until the aggegat reach US$16.0 million,40% until the aggrgate raches US$25.0 million,25% until the aggregate reaches US$35.4 million, and10% for the remainder

5. Trainig for the Unemployed 25,500,000 100%, excluding taxes6. Publications and Publicity 5,000,000 100%, excluding taxes

Campaigns7. Staff Inentives, Travel and 9,800,000 100% until the aggregate reaches US$3.0 million,

Incremntal Opeating Costs 80% until the aggregate reaches US$7.5 million,40% until the aggrgate reaches US$9.0 million, and25% for the remaind0r

8. Unallocated 17,000,000Tota 174,000,000

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Schedule C

LABOR MARIE AND PRODUCIVIV ENHANCEMENT PROJECT

METABLE OF KEY PROJECT PROCESSING EVENTS

(a) Time taken to piepare: Nine months

(b) Prepared by: Secrariat of Labor and Social Welfare (STPS)with Bank assistance

(c) First Bank mission: October 16-25, 1991

(d) Appraisal mission deparue: June 29, 1992

(e) Negotiations: November 17-19, 1992

M Planned date of effectiveness: Expected January, 1993

(g) List of relevant PCRs and PPARs: Draft PCR Ln. 2876-ME, June 12, 1992

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Schedule DPage 1 of 2

STATUS OF BANK GROUP OPERATIONS IN MEXlCOAs of September 30, 1992

d ina Ia"3 OLaSM

aS " .A .ina _,14 _

1 .. te_ W DENIM Pik m

-a 334 - - -w- - -r

L.6402 aIkW.. swa. 3m "ads. eoul seee &"am szSoLa. 2u9-94 M91 u10ow laUwey I L 1436.46

Ut M4 It" snAS go gqt I_ TOG SS.0la. S33.1 1983 am 4aftst wi$ssa 14n.t1La. 17014 £988 s1I b.d. ftudy Las I 409.12La. 39o 198 5_*1 * s Se.L.

La 199.1rs 1990 Down ees 4aze Ps.n 3.0

356, as$ am t*W*. i.t It.".

.2130710 U 9 3m 3el beae I telaG5.t0 04La. 1S743 1189 58F31 AguedL SW. *g Ulley 49.11la. SU749. 11l" 3*f twede leil"w*Las 494.74

la 2649-lt o" S""6 W"" $@ emu"wa " S U.ttnju 4-as US?7A U*tu&U" U0.ee eJola. S1335.n 1967 am OMtesg. *gelinm.ei 3.. 14.00 3.39

Zs. 1548.1 1981 00131m Sma-liMsdm.90el P.' Z510.00 0.44

La. 110 198 38W3A9 teaIl,e 300.00 14.93'LA. 141.1 U18 am igWlmi. Dew. _t n 80.0 'U."W. 154.1 1947 CSI &1upa 8a.a -0.00 3S.0

La.7149.0 1988 383w" SalAd Peale tmsma WAS6310 U."9

3.74.0 17u mabe. e laJ a .. 82O4 VA St" $"SW .estreti 2.1U

* L.mU0 19" am Oes U 264.00 S.4&n. 383J1 t" 1987 uu a wabobittas, 1.00 64.17

Ls. 3854.8* 1987 am23 8.bdiam. s lade.i 2? 10.09 41.41

in. 3J43 1987 00131 8all-rel eM. 300 3A."In. 0871.10 1989 38101A* ma- Matate 1. 1.94

La. 31678.10 19498 A 3U"131 1aqag belma 840 3.31

&a. S9191 1968 o 433 Dage e ene 45." 7.04

La. 394443 38 3u.18 Pane Iebbl33ste 10 .00 4.17

tL.040 199 DEN1 lU.l% sw em U 3M0.00 49."

La. 366.1 193 am3 _ peaeaSae 4 v.2aC a 440 1.S9a. S3. 19a S13 Ulai6me Seem l Assmng 47ee 41.44

* D01 1989 00131 _ad swep G a00.00 045.81

La 340.1 18 35063 Zn.uam go"" Ca 310.40 183.06La. 1"41.1 1998 00531M Apen "ouhra Uinkto 100.00.15

to. $1306.1 1990 ae taee 4eoee. 1o-so 341.1a 33743 19913a 9 a seam" U 300.00 141.00

4a. 137.1 1981 VA2 54a64 ls iShG UK 180.00 137.8a. 1300.0 11 gMh Wa tse " Sane. U*60.0 u100.1

ln. 1W41 11 A3 fein. 3am u 130.ee 4.1tL 37.10 1981 VAl3 1p&in 1talee 8*. 400.00 s30.0

ta. 33438.10 1991 "013" grtee mwn4 beaS9U?3.0 1.443

La. 943 1983 51 leeletssS 9.aln4. MA0 S2.""a 344w1432 1983 9*A31* $6*004 ge10 Zt .00 WA.Sto. 144143o lot 1993 58131f hgiS..3. uvao 10.00 141.06

La. 111.1 bew 13 a_m1 ZUIleU" U 0.00 0.6AO

TOWe 19482.844 D.".".002 oeb baa 2.. epI S.W3.86

?tAl am bld bW nba toak 14.216.96

01 ~k ba bes npeUt 93.3

?nee oldlobegeed 1.410.40 3*430.06

e,apmsideSg at alias 1T8 SW ftaly dtobuee. Vd4SAM.3bo See "Ce albeel0. PsI.. U09-63.ub

9*Su. 5103. or htagu Las" "W" IqlemneUtm. sauregb 10. 19

- 11 -

Schedule DPage 2 of 2

LABOR MAR AM PROUFITYI MUMMA PRS

STATEMENT OF IPC INVE:STENTSAs of Septmber 30, 1992

(US$ million)fial -Oriinl Approal…------ftar X lObliw Type of ims LOan oity Tt

.......................................... ...................................................................

1953/ Ind utria eact Circle, S.A. of Indstrial equipeet 0.80 0.00 0.30tna riatol de Meico, S.A. a, A!rcraft amgino Overhal 0.52 0.00 0.521961 Acos Solar, S.A. a/ Twist Orinus 0.00 0.00 0.0019621568 Fuavidora Nonterrey, S.A. a, Steel 2.30 21.44 23.74194 Tbo de cero dC Mrico Stainles Steel Pipes 0.71 0.10 o.8119d3 Giica dot Rty S.A. 6/ Sodiwu Sulphate 0.07 0.00 0.07190446 Industria del Hehrro, S.A. Construngian equipet 0.00 1.9f 1.961970 tinera del lorte */ Iran are Mining 0.75 0.00 0.7519. Cetunese Kexic n, I.A. *I Textiles 8.00 0.00 8.001972 Praoetara Pipel Periodico, "ACV a/ Pulp nd Paper b/ 0.00 0.00 0.001973J79 cotas Veracru, S.A. */ Cmnt 1135 0.00 11.351974/81 Canrm Aristo Nee of Tcwism 1.00 Ot3 1.301975/78 exinox, S. A. a/ Stainless Steel 12.40 3.18 15.18197rmo/1e4 Papole Pendremse, S.A. a/ Pulp and Pper 6.16 5.00 11.161978 TaeWftlatas Nxicanos, S.A. of PmraticaIs 19.00 0.00 19.001979/O/t87 Hotel Casine Real Ixtapr, S.A. Tourism 0.00 4.20 4.201979/84 Esweeas Tetteca, S.A. ao cemnt 30.00 7.95 37.951979 Conmtor cbonterroy, S.A. Electrical wire & Cebie 8.41 0.00 8.411980 Inaintries Resistol. S.A. a- Particle lOard 8.00 0.00 8.001980 Vidrie PIloo de 14xico, S.A. flat Glaso 15.00 0.00 15.001980 Miner Real de AWnles, S.A. a/ mining 30.00 0.00 30.00191t Cpcion Agoindustrial S.A. Agibin 6.30 3.00 9.30*98tfl6 Calulaicos Cutmrwo, $A. 4/ Pulp nd Paper 15.50 0.00 15.501984 Capital Goads Facility a/ Capital Goads finncing 34.00 0.00 34.00>951/85 Metala", S. A. Auto chassis 8.00 1.40 9.401985 ltenProtm, S.A. de C.V. a, Agnibuns 2.00 0.77 2.7?1985 Premiane Ind. icu, S.A. Pertncl micals 32.00 0.00 32.0019118 Cewsm y Papal de Ouuwa, 51 de Cv Pulp ad Pwr 10.00 3.07 13.07198 Agree Phas I (AR) al Vg. gd Fuit Pr_o ing 1.30 0.50 LOOo9w9 Ciam Constr. ar. Fec. e/ Coatr. .ratn fac lity 20.00 0.00 20.00

1987 Ikustrias tflm S.. de C V. Chaicals & Petro_ CSals 2.00 0.50 2.5019s Sbeled Powde Ni ca Auto Aaaly 9.00 0.00 9.001988 Cre_st Mrkt Aggegtes Constrmin twriats 73.00 0.00 73.001933 Apsco, 5. de C.V. Cent & Cot. Mar1is 4.00 0.00 6.001988 Apco, S1.. de C.V. c/ Camat & Cost. Hatrials 45.00 0.00 45.001911 alsasi, S.A. de C.V. Food aid Food Proesig 20.9 2.00 22.96198/92 Potiew (8). A.S. de C.V. PetroeiCcals 19.10 0.00 19.101989 G40 Fm/Vi"a Conmr Goods Cot, loesrat 80.00 2.60 107.60969 1ac Swfin Devaloent fVIns. 40.00 0.00 60.00

1989 C_ntes MCxicancs Cont & Coat. Mateia4ls 60.00 0.00 60.00199091 C S, .A. de C.V. ct eltetrosmefactnr4n 35.00 9.4 44.541990 SI.Alpr, 1.Ah de C.V. Petrehecals 7.00 0.00 27.00199O Save. acianaln de Mexico D0evA t Fine 40.00 0.00 60.001990 Sulomer Credit Line Oeveno~st Firence 23.00 0.00 20.001991 Mexico fun aS oy Capital Mutate 0.00 0.00 0.001991 PetroVel, S.A. Cammacls a Patrackmicals 32.0o 0.00 32.001991 Vitro Fletado di. & RL ated 1 aeaC. 25.00 0.00 25.001991 Vitro, S.A. Glas & Reoated MEst. 0.00 10.17 10.171992 C.lutlw de Telefnia S.. de C.V. Teleoamicatien 1.00 1.00 16.001992 Crupo Inutrfal sicbe, de CV Bakry 25.00 0.00 25.001992 Aislantes Leon .A. de C.V. Battry fctuin 10.00 7.03 17.03r192 Gnle Pseds Turi 0.00 0.00 0.001992 Gpe F we Probe l t Fin 0.00 7.50 7.501992 Bco ercantil del torte, *S.C.. le snt finsne 20.00 0.00 20.001992 Tlu Totl Road Trrt Ste 13.75 0.00 13.7592 indepro, S.A. de C.V. ft Ptc ls 4.00 0.00 4.00

1992 Grie Pogdos f/ TourisM 20.00 0.00 20.00..... .... _... .......... ..............

Gross Totat Colit_nt *, 1005.18 118.21 1123.39Lees Cncetllatioas, Terminations. Repysents & Sales 409.25 38.09 6.35

Total CeAisants ow Meld by IFC 595.92 80.12 676.04

Total Undisbursed (Including Participants) 31.98 0.91 32.89

.............................. ......................... ........................... __ ....... . ----.-*----*.-...........

a/ Inhtamnts which have been fully cancelled, terminsto, written off, sold, redeesd or repaid.hi 1188S0.00.ce Sct d. pdlamcnnts of 830.0 million (A4sea), 820.0 million (Vitro), an 819.8 mtilion (CoAduex).d/ Ctaista of aspproved and signed projects (including munderwritin, but xcltuding sap

transactions i.e. Banco Serf in USS6.5 wln., Indelpro 86.0 uLn., and _ 840.0 d n.). idegilva: LA2CIet MNIW Cmimatns caruist of disbursed nd vudisbursed investrents. IFC-9-92.wklft Pendino Ctinsmststs. MWoaner 10, 1992

MAP SECTION

890 24094

MEXICOLABOR MARKET AND

PRODUCTIVITY ENHANCEMENT PROJECT

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*)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Sw c. 0, .6

$41A C 0 A a plhip-I Iitia h\

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TAMA ~ ~ ~ ~ ~ ~ ToGATML

Rit N CAS '

.aw > n SAl I oGU/S T2/

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aas o 1 0 m 3pvX. 2 %jsus e ico a *8Xo V ~~~~~~~~~~~~~~~~~~~~~~~~GUATEMALA .

: _i, G t * ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~T. HONDUIRAS

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