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CURRENCY EQUIVALENT

Currency Unit CYl987' CY1988' CY1989? CY1990 CYl991

US$1 146 971 Ft. 50.1413 Ft. 60.800 Ft. 62.000 11.0001 Forint (Ft.) US$0.02] US$ 0.02C US$0.(16 L'S$0.0161 LS$0. il41

FISCAL YEAR

Januarv I - December 31

ABBREVIATIONS AND ACRONYMS

CEF - Catching-up-with-Higler-Education-in-Europe FundCMEA - Council for Mutual Economic AssistanceCOCOM - Coordinating Committee for Multilateral ExportsCSO - Central Statistical OfficeCSP - Council for Scientific PolicyFL - Foreign LanguageGCSE - General Certificate of Secondary EducationGNP - Gross National ProductGOH - Government of Hungary

HAS - Hungarian Academy of SciencesHE - Higher EducationICB - International Competitive BiddingIIF - National. R & D Computer Networ'kIMF - International Monetary FundIRP3 - Third Industrial Restructuring Project (Loan 3020-lIU)MOE - Ministry of Culture and EducationMOL - Ministry of LaborNEM - New Economic MechanismNCFL - National Council for Foreign LanguageNOICC - National Occupational Information Coordination CouncilNTC - National Training CouncilOECD - Organization for Economic Cooperation & DevelopmentOMFB - State Office of Technology DevelopmentOTKA - National Scientific Research FundRLDC - Regional Labor Development CenterRTB - Regional Training BoardSPC - Science Policy CommitteeSTR - Scientific and Technological ResearchSWLO - State Wage and Labor OfficeSZTAKI - The Computer and Automation Institute of the HASVGMK - Intra-enterprise business partnerships or work brigades

Period Average

2 Period average covering period January to end-September, 1989.

HUNGARY FOR OFFICIAL USE ONLYHUMAN RESOURCES PROJECTSTAFF APPRAISAL REPORT'

Table of ContentsPage No.

I. THE HUMAN RESOURCES SECTOR AND ECONOMIC REFORM. 1A. Introduction 1B. Economic Background 1C. Human Resources Sector Issue 2D. Government Strategy and Bank Involvement in 6

the Human Resources Sector

II. THE PROJECT. 9A. Project Objectives. 9B. Brief Project Description. 9C. Details of Project Components 10

(1) Employment and Training 10Employment Information and Services 11Adult Training 12Improved Youth Training 15

(2) Higher Education and Research Program 16Higher Education Reforms 16Foreign Language Training 17Human Resources for Science and Technology Research 19

D. Environment Impact 21

III. PROJECT COSTS, FINANCING AND IMPLEMENTATION. 22A. Project Costs. 22

Project Financing 25B. Implementation. 26

Implementation of Employment and Training Component 27Implementation of the Higher Education andForeign Language Components 28

Implementation of Science and Technology Research 29C. Procurement. 30D. Disbursement. 32E. Audits and Reports. 33

IV. BENEFITS AND RISKS. 33

V. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS. 35

1/ This report is based on the findings of an appraisal mission which visited Hungary in October 1990. Themission comprised M. Boissiere (Education Economist and Mission Leader), D. Fretwell (Employment andTraining Specialist), J. Schweitzer (Principal Educator), S. Sigurdsson (Senior Implementation Specialist)and Anthony Wheeler (Education Economist). In addition, consultants G. Graves (Foreign LanguageSpecialist), J. McCullough (Scientific Research Funding Specialist), C. Weiss (Science Policy Specialist)and S. Wolff (R&D Computer Network Specialist) contributed substantively during preparation of the project.

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.

PageNo

ANNEX I POPULATION AND LABOR STfIISTICS

TABLE 1. Population by Sex and Age Group 37(January 1988)

TABLE 2. Comprehensive Fertility Indicators for Hungary 38(1880-1980)

TABLE 3. Distribution of Active Earners by 39Branches of the National Economy

TABLE 4. Educational Backgrounds of the Labor Force 40in Hungary

TABLE 5. Monthly Basic Wages, Ler Capita Labor Costs 41to Employers and Actual Earners by Occupation

TABLE 6. Staff of Public Employment Services per Thousand 41of Working Age Population (15-64)

TABLE 7. Economies in Transition: Structural Adjustment 42in OECD Countries

ANNEX II EDUCATION STATISTICS

TABLE 1. Er.rollment end Teaching Staff in Education 43TABLE 2. Summary Data on Secondary Education Institutions 44TABLE 3. Secondary Level Schools/Apprentice Schools 45TABLE 4. Adult Vocational Training-Number of Courses 46TABLE 5. Adult Vocational Training-Enrollment by County 46TABLE 6. Retraining Support by Sector 47TABLE 7. Distribution of Higher Education Institution by Size 48TABLE 8. Admission, Application, and Enrollment in 48

Higher EducationTABLE 9. Student Enrollment, Admission and Applications 49

by FacultyTABLE 10. Student Enrollment by Field in Higher Education 50TABLE 11. Growth of Student Enrollment by Field 50TABLE 12. Total Number of Staff in Higher Education 51TABLE 13. Number of Teaching Staff in Higher Education 51

(1987-88)TABLE 14. Comparative Data on Education 52

(1986 data unless otherwise specified)TABLE 14.1 Gross Enrollment Ratios Tertiary Education 52

(1987 or latest)TABLE 15. Expenditure of Educational Institutions 53

(Forint Million; Current Prices)TABLE 16. Budgetary Expenditure per Student (Ft.) 54TABLE 17. Expenditures for Universities and College 55

Under MOE

ANNEXES (continued)

Page No-

ANNEX III. SCIENCE AND TECHNOLOGY RESEARCH STATISTICS

TABLE 1. Number Of Employees In Research and Development 56

TABLE 2. Distribution of Scientists and Engineers Engaged 56

in R+D (1989)TABLE 3. Percentage Distribution of Scientific Researchers 57

by Age (1972-1980)TABLE 4. Allocation of The Hungarian Research Fund (OTKA) 58

(Approved Subsidies 1986-88)TABLE 5. Number of Scientists per 10,000 Inhabitants for 58

Selected Countries (1982)TABLE 6. Per Capita R+D Expenditure for Selected Countries 59

TABLE 7. Expenditure for R+D In Selected Countries 59

TABLE 8. Submitted and Approved Applications of OTKA 60

TABLE 9. Size Distribution of HAS Research Institutes 60

In Natural Sciences

ANNEX IV. EMPLOYMENT AND TRAINING PROGRAM IMPLEMENTATION SCHEDULE 61-68

ANNEX V. CRITERIA FOR SELECTION OF CEF PROPOSALS 69-80

ANNEX VI. CRITERIA AND PROCEDURES FOR YOUNG SCIENTISTSUPPORT PROGRAM OF OTKA 81-84

ANNEX VII. CRITERIA AND PROCEDURES FOR THE SCIENTIFICINSTRUMENTATION CENTERS 85-92

ANNEX VIII. HUMAN RESOURCES DEVELOPMENT PROJECT ESTIMATEDQUANTITIES AND COSTS 93-102

ANNEX IX STAFF APPRAISAL REPORT SCHEDULE OF DISBURSEMENTS 103

ANNEX X BIBLIOGRAPHY OF MATERIALS IN THE PROJECT FILE 104

HUNGARY

HUMAN RESOURCES PROJECT

STAFF APPRAISAL REPORT

Basic Data

Country Data

Per-Capita GNP (1989) $2570Total Population (1990) 10.3 millionPopulation Growth Rate -0.1%Total Labor Force 4.9 millionLiteracy Rate (% of Adults) 98.0%

Enrollments (1989/90)-

Total Total Enrollment Female enrollmentLevel Enrollments as % of Age-Group as % of Age Group

Primary 1,183,600 97% 97%

Secondary 483,500 70% 70%

Higher 72,400 15% 17%

Expenditure on Education (1987)

Government expenditure on education as percent 7.6%of total public spending

Government expenditure on education as percent 4.9%of GDP

REPUBLIC OF HUNGARY

HUMAN RESOURCES PROJECT

STAFF APPRAISAL REPORT

Loan and Pro,ect Summary

Borrower: Republic of Hungary

Amount: US$ 150 million

Terms: Fifteen years, including a five year grace period, at theIBRD standard variable interest rate.

ProjectObjectives: The project would address certain priority human resource

issues which constrain a successful transition to a marketeconomy. Specific objectives are to: (a) assist unemployedworkers to find jobs and enterprises to find suitableworkers; (b) provide relevant training for youth and adults;(c) improve the responsiveness of higher education to thenew technological and managerial demands of a marketeconomy; (d) assist in expanding and reorienting thetraining of science and technology researchers; and (e)promote foreign language competence so as to expandinternational economic and technological ties.

ProjectDescription: The project includes an Employment and Training Program and

a Higher Education and Research Program.

The Employment and Training Program would: (a) developemployment information and services to promote labormobility; (b) improve occupational training for adults byproviding support for a labor market based training systemwith strong links to private and public employers; and (c)initiate reform of vocational secondary schooling bydeveloping a new curricula with more general education andbroader training to replace the out-dated and narrowcurricula currently used in vocational schools.

The Higher Education and Research Program would: (a) supportthe introduction of competition-based grant funding forhigher eduction programs according to criteria whichemphasize greater collaboration and resource sharing amonginstitutions of higher education and research and newinterdisciplinary programs; (b) develop a program ofpractically oriented foreign language training; and (c)support development of human resources for Science andIechnologv (STE) by earmarking a portion of the competition-

it

based National Scientific Research Fund (OTKA) for youngerresearchers, refurbishing the stock and improving themanagement of the centers of scientific instrumentationfinanced by OTKA, and upgrading the national R&D computernetwork (IIF) used by academic and industrial researchers.

The project's major policy actions include: (a) making adulttraining more responsive to labor market conditions bystrengthening the recently established National TrainingCouncil, (b) streamlining management of secondary vocationaleducation and training by reducing the supervisory role ofline ministries, (c) introducing a unified normativefinancing system for higher education, and (d) granting moreautonomy to the universities, the Academy of Sciences, andOTKA.

Benefitsand Risks: Benefits. The major benefit woul.d be to promote a quick and

flexible supply response to the economic transformation ofthe Hungarian economy. Employment services developed by theproject would alleviate unemployment and assist inredeployment of labor. Hungary's base of skilled workersand professionals would be expanded and improved to assistthe country to compete successfully in a European framework.The project would also improve the national capacity forresearch and technological development, with an enhancedcapability to respond to changing market needs.

Risks. The major risks are: (a) that the past fragmentationin the education and training system has resulted inbureaucratic vested interests which may try to preservetheir spheres of control and delay implementation; and (b)newly created agencies would have inadequate experience toimplement major components. The first risk is beingaddressed by providing sufficient financing to induceeffective participation and sharing of resources among theproject beneficiaries, while the second risk is beingaddressed by incorporating technical assistance tostrengthen institutional performance.

iii

Estimated Projec. costs:Local Foreign Total

-US$ Million --

Improved Labor Programs 5.5 2.6 8.1

Adult Training Programs 48.0 19.8 67.8

Improved Youth Training 30.1 29.9 60.0

Higher Education and Research 45.7 58.9 104.7

Science and Technology 30.2 17.8 48.0

Total Base Costs 159.5 129.1 288.6

Physical Contingencies 9.6 7.8 17.4Price Contingencies 20.7 13.1 33.8

Total Costs 189.8 150.0 339.8

Financing Plan:Local Foreign Total__. -_ =__

----- US$ Million -------

Goverrnent of Hungary 189.8 0.0 189.8IBRD 0.0 150.0 150.0

Total Financing Requirements 189.8 150.0 339.8

Estimated Disbursements:IBRD FY

FY92 FY93 FY94 FY95 FY96-----------------US$ million-------------

Annual 20.0 35.0 50.0 40.0 5.0Cumulative 20.0 55.0 105.0 145.0 150.0

Economic Rate of Return: Not Applicable

HUNGARY

HUMAN RESOURCES PROJECT

I. THE HUMAN RESOURCES SECTOR AND ECONOMIC REFORM

A. Introduction

1.1 Thie economic transformation of the Hungarian economy needs to becomplemented by an extensive reorientation in the way HungA :y develops and usesits human resources. The economic reforms aim at establishing an open andcompetitive market economy. If human resources are to make their propercontribution to Hungary's success as a small export oriented economy, then anumber of critical issues must be addressed. These issues include: coping withemerging unemployment and redeploying labor to higher productivity uses;retraining adults for the new skills needed as a result of economicrestructuring; reorienting the narrow and rigid vocational training for youthin order to develop a more mobile and technically adaptable labor force; andnarrowing the technology gap between Hungary and Western Europe by reforming andexpanding higher education and professional training, especially in the fieldsof management and scientific research and development./ The central theme ofthis project is the need to redirect human resources investments so as tomaximize their contribution to economic competitiveness.

1.2 Chapter I of this report gives the economic and sector backgroundto the project, focusing on human resources issues, which if unresolved, willthreaten the success of the economic reforms. Chapter II describes projectobjectives and activities, while project costs, financing and implementation arediscussed in Chapter III. The benefits and risks of the project and the policyagreements reached with the Government of Hungary (GOH) are set out in ChaptersIV and V respectively.

B. Economic Background

1.3 Hungary is well known among the countries of Central and EasternEurope for a sequence of economic reforms, beginning in the late 1950s andculminating in the New Economic Mechanism (NEM) in 1968, which modifiedtraditional central planning in an attempt to make it more flexible. The NEMresulted in economic improvements for a few years. But problems of inflationand macroeconomic imbalances arose and the pace of reform was uneven in the late1970s and 1980s. The recent evolution of multi-party democracy has facilitatedthe realization that only a complete transition to a market economy -- withcompetitive product, capital and labor markets -- would make the economyinternationally competitive and restore economic growth.

J In response to a request from the Government of Hungary (GOH), an extensivehuman resources sector review was jointly undertaken by the Bank and theGOH. The analysis and conclusions of this review are incorporated in theBank report, Hungarv: The Transition to a Market Economy -- Critical HumanResources Issues (Report No. 8665-HU, Green Cover, August 1990). The reportcontains extensive discussion of issues summarized in this chapter.

,11 'llw C(ovtritiitt'iit ', recent mei-dimn term economic program addressesit i ;i i"p t eite lit ing a c ompreheensive program to support

I(I i. NI i.,l pri ,;t e S;v.tor development, inlcIuding direct foreigr.,1:1 li . Ir w4)%(er nment also;O recogtiizes that the exercise of effective

i jl! .i 1';( ill thiose enterpriseq whiCh are still state-owned Is necessary

tu', the e fiiciveni of rtsource use. This will also allow the state.I,'lliVK; iii r'sttlicturling or closing down insolvent enterprises and in

I .,, ! ,,. vitl' ';h'; i i ;. Thle govertnment is also addressing social safety net.i. it ., j(ilfit s:(ttidy witth the hatik (see para. 1.23). Tthe import

1II I ., ,,! it pin',vatit, which was iltltiated in 1989 and will be completed in* % i I I i iereoase compet it ioi lii the economy and exert strong discipline

ht'l,,tvior of doutestic firms. Tthrough further decontrol of prices,'i; L,ti; i , of tthe finanicial system, and deregulation, the role of the state

I il to t(lolloi.; will be reduced, while the progressive reduction in taxes andii* I ' tit eXpI.'idittures (primarily subsidies) will permit the market to emergeh., pt itiipal itteans of allocat ing resources.

'Despite the anticipated growth of the private sector, large scaleiii-'wplo\'ietet (see para. 1.7 below), which the government has limited capacitytvo idd ress, will result from the above measures for the first time since the endIf Wo,rld War 11. Moreover, new skills will be needed by Hungarian managers,piofessiouials aiid workers if Hungary is to develop into a competitive open'(cetiMim. TI'he twinl pressures implied by these two developments present a;"Illdable challenge to the human resources sector.

;. Human Resources Sector Issues

1 6 ETplovment and wages. The Hungarian labor force was estimated at1.9 4iillion within a population of 10.3 million in 1988. The sectoral pattern'f einploymneTIt has followed the evolution of the sectoral shares of GDP. Hungary-miharked uponi a stratt-gy of rapid industrialization after 1949 when the socialistgovernment came to power. Since that time the share of employment in agricultureJrop'ped from 54% to 19%, the shares of industry and services rose from 22% to1% anid from 24% to 40% respectively (see Annex 1 for detailed data on population

.i'd elttploymenit).

l7 Unemployment was not considered a prcblem in the Hungarian labornalket utntil quite recently. Official unemployment statistics are recognizedto he limited only to the registered unemployed. But the staff of the CentralStatistical Office (CSO) and the Ministry of Labor (MOL) unofficially estimatethat, if reliable data on both the registered and not registered unemployed wereavailable, the unemployment rate would have averaged about 1.5 percent in 1989ii,d would likely have been about 4 percent in December 1990. Many stateentterprises have disguised unemployment due to rigidities of the labor marketacid overall economic inefficiencies. Estimates of over-staffing in the stateCn'ierprise sector range as high as 20 - 30 percent. Import liberalization, loss

;(MEA markets and the restructuring or liquidation of enterprises are expected: rive rise to significant increases in open unemployment. Although it is

n. ilt at this time to forecast reliably the magnitude, simple calculationsi'pori over-staffing scenarios indicate potential unemployment rates could

-3-

peak in le,. range of / to 14 percent in 1991 and 1992 /, Ulnemploymentcompene;t iti., luid(ed from the State budget, was introduced in Hungary in 1989.Legi.si. li(,i luis been adopted to finance this through payroll taxes on employersMt1(

t (WIplr¼t'; wittl some State budget contributions as in most OECD economies.

1.8 I:ven greater urgency for the development of employment and trainingprOgraillX dw; well} as higher education expansion and reform derives from thedetttglioiytph i c , which is concentrated now in the secondary school age groupsamid will soon enter higher education and the labor market. This demographichkully i;S tlit (()M1.iCquence partly of the fertility promotion policies In the 1960saMId 19,Us aid partly of the greater number of women of child bearing age fromthe bab, boomI of the early 1950s. Tightening of policies on abortions in the19/Os mav.l also have had an impact.

1.9 Economic competitiveness and investments in human copital dependcruciallv upoIn wage levels which are flexible and upon a wage structure whichis responsive to skill and education. The previous rigid system for wagedeterminitationi hiindered the achievement of these objectives. Under this oldsystem, the government determined minimum and maximum wages -- referred to aswage brackets -- for each occupational group, and enterprise management had some

leeway within these brackets to set wages for individual employees (see AnnexI, Table 5 for data on the wage structure by skill). This resulted in an

inflexible system with a compressed wage structure which provides insufoicientincentives to individual investments in human capital in a market economy. Wagereforms have been introduced by the government to allow managers of enterprisesto determine the structure of wages, subject to taxes on increases in the totalwage bill of the firm to control wage inflation. It is still too early to tellif these wage reforms will have the desired effects.

1.10 Another striking feature of employment in Hungary is the high laborforce participation rates of women and the contribution this has made toHungary's labor force growth. The female crude activity ratio was 40.7% in1987, compared to 51.3% for men. Although rising female participation rat-s aretypical of Western European countries, this phenomenon is more pronounced in theEastern European countries, mainly because of social policies that promotegenerous maternity leaves, child care and family allowance benefits for workingwomen. As the transition to a market economy proceeds, it is important for thegovernment to keep in mind the impact on women and their families of the policymeasures to be introduced. Families have come to depend upon two incomes andwomen may be more adversely affected by unemployment and in need of retraining.The proposed project would address this by designing flexible adult trainingprograms which can meet the special trairing needs of women and the timeconstraints they face. The statistical and analytical capacity being developedin this project will also follow the changing role of women in the labor marketand give the basis for improving training for women.

1.11 Education and Training. Education is compulsory through primaryschool (grade 8) or age 16. About 95% of the pupils continue into one of thefollowing after completing primary: (a) gymnasia, which are academic secondary

V Ibid., Report No. 8665-HU, Annex I, p.72

- 4 -

schools, (b) vocational secondary schools which offer occupationally specificas well as; general education, or (c) apprentice schools which offer verys,pecialized job training (typically for three years) in conjurnction withenterprises (see Annex II for detailed statistics on educational enrollments).1 recent Y sears the distribution of secondary enrollment has been about 25pel-CoTlt inl gvmnlasia, 25 percent in vocational secondary schools and 50 percentini t he app renit i ce schools.

1.12 The early specialization of youth at age 14 needs to be delayed infavor of developing more basic education (a minimum of ten years) arid a broadervocational skills base. The apprentice schools do not offer genuine apprenticeprogramns in the traditional sense. Neither do they function as part of a "dualtraining svstem" as in the Federal Republic of Germany. They essentiallyprovided a cheap labor force to enterprises with some minimal and narrow skilltraining of primary school leavers but without providing much general educationand training beyond the primary level. These training programs are increasinglyseen as irrelevant and many young people drop out before completion. Thevocational secondary school training is also excessively rigid and narrow, thecurriculum being keyed to outdated lists of national vocational specializations.This will pose problems for future absorption of technology as Hungary attemptsto become more competitive. The proposed project would initiate the necessaryrestructuring of training.

1.13 Flexible training and employment programs for adults in anenvironment conducive to their needs are required to address structuralunemployment problems. The apprentice and vocational secondary schools offersome education and training programs for young and older adults. But they arenot adequate, either quantitatively or in their approach to adult training, tomeet the challenges of the transition to a market economy. The current programsfollow the standard curricula based upon the outmoded national list of vocationsand operate on the school year calendar, whereas modular programs with openentry/exit times are needed and would be introd-rced by the project.

1.14 The management of the vocational training system, which is theproduct of a planned economy and involves many different line ministries, ismuch too cumbersome to respond rapidly to the changes in required skill profiles.In the past, administrative responsibility for vocational training was sharedbetween the Ministry of Culture and Education (MOE) at the national level andthe county councils on the local level. MOE was responsible for curriculum andstandards and allocated money from the state budget to the various sectors ofeducation and training. The county councils maintained and operated schoolfacilities within local communities based upon the block grants received throughthe MOE allocetion. MOE collaborated with other sectoral ministries and withthe State Wages and Labor Office (SWLO) with respect to vocational trainingcurriculum and standards. The new Government has established new ministries,including a new Ministry of Labor which has replaced the SWLO. Vocationalcurriculum development will be directed by the MOL department in charge ofvocational training, with the assistance and cooperation of occupational advisorycommittees and the National Institute of Vocational Training. The MOE willdevelop curricula for academic subjects and will be in charge of finance andadministration of vocational secondary schools with regional/local educationauthorities.

1.15 Higher Education. The structure of undergraduate education includesthree year colleges and five year universities, which are generally independentof each other, with few students continuing from college to university. Thecollege programs were started in the early 1960s with the aim of trainingproduction engineers who did not need deep theoretical knowledge and are morealong the lines of the post-secondary technician education "fachhochschulen" inthe Federal Republic of Germany. The traditional five year university programsare generally specialized; notably absent are the interdisciplinary programsemphasized in OECD countries. Some universities have realized that a three yearprogram is sufficient to prepare students for the labor market in their given

professions and have recently initiated a three year option within the five yearprogram.

1.16 The complicated and outdated system of post-graduate degrees needssimplification. The Doctor Universitas degree is awarded by the universities;the degrees of Candidate of Science (C.Sc.) and Doctor of Science (D.Sc.) areawarded by the State Committee on Degrees. These degrees are usually awardedfor research work and publications undertaken in the institutes of the HungarianAcademy of Sciences (HAS). The D.Sc. is the most advanced degree, requiringpublication of substantial research articles or books. It takes an inordinatelylong time under this system before a young scientist can initiate independentresearch ventures. Following the human resources review undertaken with theBank3', the HAS and the MOE arc drafting a law to simplify this system ofdegrees, and the proposed project would have a component to support research byyoung scientists.

1.17 Reforms in higher education -- with special emphasis on managementand finance, efficiency, quality improvement and more relevant programs -- areneeded. The fragmentation of management and finance makes it difficult foruniversities to share resources or improve the efficiency and relevance of theirprograms. The Ministries of Culture and Education, Agriculture, anid SocialWelfare (which covers health) each have their own colleges and universities,often in close proximity to each other. Student-staff ratios are low in manyfaculties of both colleges and universities. At a time of budgetary constraintsand a growing university age population due to a demographic bulge in thepopulation age structure, special efforts are needed to increase efficiency.Structural reforms are also needed to make the higher education system moreresponsive to the needs of a market economy. Expansion of enrollments is neededto raise participation rates in higher education to European levels. New andinter-disciplinary programs need to be introduced, such as management, marketingand financial training for engineers and scientists along with practical foreignlanguage training. Traditional curricula in many specialties need modernization,e.g., accountancy programs which must be adapted to internationally acceptedstandards. The proposed project would address many of these concerns.

1.18 Human Resources for Scientific and Technological Research. Hungaryhas a long and respected tradition in science and technology research (STR) andhas struggled to maintain its STR capacity by investing about 2.6 percent of its

3Reference 1, Ibid.

CDP on R&D, a much higher proportion than the typical coiltry at ilt _! el ofper capita GDP. On the other hand, due to COCOM re- ;ctioiu; aili it.! CMEAlinks4', Hungary has spent relatively little on tile importation aiid adLiptationof Western technology, and the links between adaptive researchi and t(c(111.Ologytransfer are correspondingly weak. This can be expected to cllail;e as theeconomic reforms proceed and there develops a genuine market-drivcn demand fortechnological innovation on the part of private and public enterprises.

1.19 However, expansion of human resources for STR is necc_s:ary as thepresent base is not adequate, either quantitatively or qualitatively, for themore intensive and market oriented technology development effort niow required.The FY88 Technology Development Project (Loan No. 2966-HU) idewtMiiied STRmanpower shortages as a constraining factor in Hungary's technology developmentefforts. But expansion of professional training must be accompanied by reformin the post-war system of higher education for STR, whereby basic research wasconducted primarily by institutes of HAS, applied research in the enterprisesor ministerial institutes, and the universities relegated almost exclusively toteaching. Integration of research and teaching in the universities is neededto keep faculty up to date and improve the training of scientific and engineeringpersonnel. Improved management, funding and quality of basic and appliedscientific research, with attention to linkages between the academic communityand enterprises, are needed to tap this source for improving the competitivenessof the economy. Finally, Hungary faces the specter of a brain drain of its bestyoung scientific and engineering professionals if the prospects for science andtechnology research seem constrained by economic and funding difficulties. Theproposed project would address these issues by providing research support foryoung scientists, improving the availability of state of the art scientificinstrumentation and supporting policy reforms aimed at overcoming the rigiditiesin the system of STR.

D. Government Strateey and Bank Involvement in the Human Resources Sector

1.20 Human resources have a crucial role to play in the government'smedium term recovery program. As the foregoing summary of key deficienciesdemonstrates, Hungary still has a long way to go to close the gap with itsEuropean neighbors with whom it must compete. Around 70 percent of the secondaryschool age population is enrolled in secondary schools, but about half of thisis in apprentice schools which are not genuinely at the secondary level becausethey offer very little general secondary education or training beyond the primarylevel. Only 15 percent of the university age population attends college oruniversity, compared with about 30 percent in OECD countries. Finally, Hungarydoes not have the appropriate employment services and adult training programsto develop the labor market flexibility needed for economic competitiveness.

l.21 Government strategy is to make up for these deficits in humanresources development by expanding secondary and tertiary enrollments, providingfor adult training and employment programs, as well as initiating institutional

V Both of these constraints have recently been alleviated so that Hungary nowhas to think of its science and technology strategy, including humanresources development, in a Western European framework.

-1I

and policy reforms and refurbishing outmoded equipment and ...i .Council of Ministers issued a resolution iii October 1990 stlppoltLiL t .it

and coherent program of human resources investments in this projact.. Tlit-i t;I.I

of Ministers also accepted that a set of more than 20 legislative iiedsurt-s X,otih

be submitted to Parliament or to the Council of Ministers to enable thle iit-forimsin the human resources sector to proceed effectively. The government believesthat it is better to adopt a major set of policy reforms as opposed to apiecemeal approach. Its view is that a good program of comprehenisive invest melitsin human resources would generate an economic return conunenstirate withlinvestments in industry and agriculture.

1.22 The Government strategy outlined above was elal)orated ill l..cooperation with the Bank through joint analytical work carried out in tl)t ilnlinl.

Resources Review prior to identification and preparation of this project l*l1COH explicitly wanted to concentrate on its priorities in eioployienlet, ti,11iliF,and higher education as expressed in this project. Thus primarv educatioji anldacademic secondary education are not addressed in this project silkoe thl,government believes that, although there are certain problems in these ai,as,it is labor market programs, vocational training, higher education and isearcllwhich are most urgently in need of expansion, improvement and reform.

1.23 In addition to the previously cited Human Resources Revie%w, Ba:ii,assistance to the social dimensions of economic adjustment in Hiuniigary inc(Jiidet.an ongoing study of social security (including unemploymernt compensation).These issues are not addressed in the proposed project. The proposed project,a direct follow-up to the Human Resources Review, would be the firsL Banik 1ikuia,.resources operation in Hungary. Valuable experience, which has been taken inteaccount in the design of this project, was also gained in the EmploymentComponent of the FY89 Third Industrial Restructuring Project (IRP3, Loan No.3020-HU). In addition, important labor market policy reforms are to beimplemented as part of the FY90 Structural Adjustment Loan (Loan No. 3228). Themost important are: removal of the wage bracket system to allow for upward anddownward flexibility of wages, removal of ceilings on the number of emplo'veesprivate sector firms can hire and the introduction of an unemployment insurancesystem in 1991.

1.24 The crucial economic issue in the government straLegy is thi.affordability of its sector investment program SJ. The current project wouldfinance about 20% of the investment- envisioned by the government's sectolinvestment program over a five year horizon §. The government views thisproject as open program of investment in human resources in that it will usethis project framework to approach other donors. The domestic investment and

a An economic analysis of some key issues in the human resources sector isgiven in Hungary: The Transition to a Market Economy -- Critical HumanResources Issues (Report No. 8665-HU, August 1990). These issues arerestricted to employment and training and higher education and researchlissues and exclude primary and academic secondary education. The healtlhsector is now being studied in joint review by the GOH and the Bank.

s This refers only to investments in employment and training and highereducation and research, not to primary or academic secondary schools. Theinvestment program calculations are in the project file (see Annex 10 for ilist).

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incremental recurrent costs of this project would be financed by the government

as the initial thrust of a larger investment program which may result from

additional donor assistance. While the local investment and recurrent costs for

this project would be affordable given current budget projections (see para.

3.6), it is essential for the government to analyze the domestic costs of

additional external assistance which may be forthcoming. The experience gained

by the Hungarian working teams during project preparation would assist them in

this analysis.

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II. THE PROJECT.

A. Project Objectives.

2.1 The overall project objective is to address certain priority human

resources 4ssues (outlined in Chapter I) which constrain a successful transition

to an open market economy. The proposed project would assist the government

program to alleviate the unemployment impact of economic restructuring and to

invest in human resources so as to promote Hungary's economic and technological

competitiveness in an integrated European framework. Specific objectives are

to:

(a) assist unemployed workers to find jobs and enterprises to find

suitable workers, with emphasis on meeting the special needs of

unemployed women and their families;

(b) provide relevant training for adults and youth, including

entrepreneurial training, especially in relation to item (a);

(c) improve the responsiveness of higher education to the new

professional demands of a market economy, with special emphasis on

improving access, relevance, quality, efficiency and financing;

(d) assist in narrowing the technology gap between Hungary and its

competitors by expanding and reorienting the training of science and

technology researchers, improving management of research and forging

better linkages between the academic community and enterprises; and

(e) in support of items (b) - (d), improve foreign language training to

promote international economic and technological ties.

B. Brief Proiect Description.

2.2 The proposed project!' consists of two programs designed to implement

the above objectives (para. 2.1):

The Employment and Training Program involves:

(a) development of employment information and services programs which

would incorporate lessons from and scale up the pilot programs

initiated under the Employment Component of the Third Industrial

Restructuring Project -- Loan No. 3020-HU (to be implemented by

Ministry of Labor);

D See Annex 8 for a detailed table of equipment and TA by sub-components.

The TA would be divided into eight packages which are indicated in the tables

for each sub-component and terms of reference are included in the project

file.

- 10 -

(b) improvement of occupational training for adults to better meetretraining needs during and after the transition period, through theformation of regional labor development centers with effectivelinkages to the regional economy and labor market (to be implementedby the newly founded National Training Council);

(c) initiating reform of vocational secondary schools for youth now innarrow and out-dated vocational training, through developing modelvocational secondary schools. These schools would provide moregeneral education and broader training in clusters of occupationalskills to be followed, if necessary, by specialized training on thejob or in programs under the National Training Council (to beimplemented by Ministry of Culture and Education and Ministry ofLabor);

The Higher Education and Research Program entails:

(d) initial steps to expand and reform higher education by supportingthe establishment of a new higher education development fund, theCatching-up-with-Higher-Education-in-Europe Fund (CEF), which wouldchannel investments in new programs via competitive grant fundingwhich aims to promote: (i) greater collaboration and resourcesharing among the overly specialized and fragmented universities,(ii) new and interdisciplinary programs, e.g., economics, financeand management for engineers and scientists, and (iii) integrationof research and teaching through expanding collaboration between theuniversities and the Hungarian Academy of Sciences (to beimplemented by the CEF);

(e) developing a program of practically oriented foreign languagetraining and a framework within which bilateral assistance forforeign languages can be utilized effectively ( to be implementedby the CEF); and

(f) supporting human resources for and reform of Science and TechnologyResearch (STRI through: (i) the earmarking of a portion of thecompetition based National Scientific Research Fund (OTKA) foryounger researchers along with policy changes to improve thecompetitive procedures of OTKA, (ii) refurbishing the scientificinstrumentation centers financed by OTKA and improving theirmanagement, and (iii) upgrading the national R&D computer network(IIF) used by academic and industrial researchers so as to increasethe efficiency of R&D information exchange domestically andinternationally (to be implemented by OTKA).

C. Details of Project Components

1. Employment and Training

2.3 As discussed extensively in the Human Resources Review, Hungary willneed a new system of labor market information, employment services and trainingto support a market economy.

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Emplovment Information and Services (Base Cost USS 8.1 million)

2.4 Existing labor market information systems are not capable ofmonitoring the rapidly changing economy or providing information needed bypolicy makers, enterprises or individual citizens to make informed decisions.National and local employment institutions do not have the techniques, materialsand qualified staff to deal with large numbers of unemployed, or to promoteoccupational and geographic mobility.

2.5 Statistical programs. The project would improve labor statistics inthe following ways: (a) establishment of an unemployment monitoring systembased upon sample surveys of households conducted at least quarterly, startingwith a pilot survey in January 1991; (b) broadening the establishment sampleframe to include the private sector, including small and medium scaleenterprises, so that representative sample surveys can be carried out; (c)improving wage and cost of living data by carrying out surveys based on theupgraded establishment and household sample frames; and (d) revising systems ofoccupational and sector classifications, including the development of asector/occupation matrix to analyze employment patterns. These surveys wouldcollect and analyze data at the regional as well as the national level. As aresult of this enhanced statistical program, the Ministry of Labor (MOL) wouldhave better information to develop and execute policies. The government agreedduring negotiations that the system of unemployment monitoring implemented inJanuary 1991 would be continued on at least a quarterly basis.

2.6 This activity would be executed for the MOL by the CentralStatistics Office (CSO), which has had good collaborative arrangements with MOLin the past. The CSO would receive technical assistance in the form of 21 staff-months of fellowships and 5 staff-months of consultant services (see Annexes 4and 8 for further details of project activities and technical assistance).Computer equipment would also be provided to augment existing capacity. Theexisting staffing is adequate to carry out the program, and some overall sav4.ngsin staff may be possible since many statistical programs from the period ofcentral planning will be eliminated.

2.7 Labor market analysis. The project would provide support to the MOLto develop its capabilities to undertake labor market analyses in the followingareas: (a) surveys of short term (6 to 12 months) labor market trends in eachregion (based upon pilot surveys now underway in two counties as part of IRP3);(b) initiation of a National Occupational Information Coordinating Council(NOICC) representing both users and developers of occupational and other labormarket information. The NOICC would assist in coordinating the development anddissemination of occupational information in a user friendly format, includingthe development of an interactive data base for users; (c) medium term labormarket analysis (I to 5 years) involving the development of alternativescenarios of occupational supply and demand which can be updated periodicallyin the light of on-going economic trends and forecasts. This would also includespecial studies of labor market aspects of social policies which could includetopics such as unemployment benefits or social security.

2.8 The staff of the MOL has acquired some experience in theseactivities under the Employment Component of IRP3. The project would provideTA and equipment to extend the IRP3 pilot programs from two counties to each ofHungary's 20 counties. The project would provide for 28 staff-months offellowships, 24 staff-months of consulting services and computer equipment.

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2.9 Emplovment services. The above statistical and analyticalactivities support the central part of this component -- the employmentservices. Before embarking on expensive retraining options, the employmentservices would assist in matching workers with appropriate jobs and otherwisefacilitate the mobility of the labor from where it is excess to more productiveuses. Special techniques and materials would be developed to help olderdisplaced workers and the increasing numbers of unemployed youth. The followingactivities would be supported:

(a) Refinement and expansion of industrial adjustment services for masslayoffs.

(b) Refinement and dissemination of job search techniques and materialsavailable to clients at labor offices.

(c) Development and dissemination of automated Career InformationSystems (CIS) which clients can operate for themselves to (i) assesstheir occupational aptitude and interests, and (ii) acquireinformation on occupational education and training opportunities.

(d) In collaboration with selected universities, development of newshort and long-term professional training programs, includingdiploma and post-graduate studies, for career counselors in laboroffices and schools.

This sub-component would provide 47 staff-months of fellowship and 36 staff-months of consulting services to Hungarian staff and computer and relatedequipment for the employment offices covering all of the 20 counties.

2.10 The above statistical and analytical capabilities along withenhanced employment services would support the development of policies toimprove labor market efficiency. These policies and programs would be closelymonitored as they are implemented by MOL. The main areas of ,o licy evaluationto be supported by the project are: (a) unemployment benefit system, includingits funding, costs and administration; (b) cost-effectiveness evaluations ofdifferent components of the Employment Fund, which was started by th ..- nmentin 1988 to address unemployment and retraining problems; and (c) planning andbudgeting processes for the Employment Fund based upon the above analysis ofcost-effectiveness. The technical assistance and staffing requirements for thispolicy monitoring and evaluation are incorporated in the labor market analysessub-component.

Adult Training (Base Cost USS 67.8 million)

2.11 The project woulc support the development of a labor market-basedtraining system. In conjunction with the labor market information andemployment services described above, the system would provide a flexible andrapid response to the training needs of adults. A previously cited report hasdiagnosed in detail the deficiencies of the Hungarian adult training system andrecommended policy changes which this project would support-'. These policies

8 Reference 1, Ibid., Chapter 3.

- 13 -

are al'o conlsistent withI those irl the Bank's recent policy paper on vocationaltrainling, whlich provides a comprehensive review of experience with trainingsystems in maniy countries9.

2.12 National Training Council Operations, The project would supportthe creation of a National Training Council (NTC) and affiliated regionaltraining boards (RTBs). The NTC would be an attonomous body with a tri-partitecomposition (government, employers and employees). It would define policy forprovision of regional adult training programs and would have a budget to funda portion (about 30%) of the costs of programs that meet NTC norms. T1he NTCnorms would encourage flexible programs whicth can meet the training needs ofvarious groups of workers. This includes young first time job seekers as wellas mature unemployed adults. This also includes incumbent workers who needskill upgrading. Flexible training _ould also meet the special needs of womenworkers, especially those in the 35-45 year age group who did not receive muchvocational training in the 1960s (see para 1.10). The NTC norms would supporcdevelopment of a comprehensive set of services:

(a) Core vocational training programs in facilities or institutionswhich provide services that meet NTC norms (e.g. modular training,flexible entry/exit instruction, etc.);

(b) Customized quick-start vocational training programs, especially fornew enterprises intending to locate in the region;

(c) Adult education needed to complement job training, includingrelevant foreign language skills;

(d) Occupational counseling and placement services;

(e) Small business technical assistance; and

(f) Mobile vocational training equipment for selected regionswhich may require rapid initiation of training, or forisolated areas having high unemployment.

2.13 Regional training board programs. The NTC would not run trainingprograms but would be a policy and funding body. Training programs and serviceswould be provided by the regional training boards (RTBs) affiliated with theNTC. The RTBs would have a tri-partite composition. The project would assistthe NTC in preparing criteria for selecting and establishing RTBs and the policyguidelines for their operations. The selection criteria would include, but notbe limited to: unemployment rates, age composition of the unemployed, commitmentof regional governments to provide resources, proportion of unskilled unemployedworkers, skills of the workforce as compared to the demand, availability ofalternate training/employment services in the region, and the availability oftransportation/infrastructure in the region. The project would support thedevelopment of RTBs in up to 10 regions. The training programs of these tenRTBs would provide a training capacity of about 16,500 training places annuallyby 1995, assuming an average training duration of 6 months. This would meet

W Skills for Productivity: Policies for Vocational and Technical Education andTraining in Developing Countries (Education and Employment Division,Population and Human Resources Department, September 1990)

- 14 -

about ?'O% of estimnated adult training needs in 1995 L'. The RTBs would provideservices either directly through the establishment of Regional Labor DevelopmentCenters tKlDCs) or through sub-contracting with institutions (public or private)which could provide services according to NTC norms.

2.114 The RLDCs would provide services under the supervision of the RTBsanid ill accordance with NTC national policy and local labor r..qrket conditions.The RL.DCs maY provide services outside NTC norms with the understanding thatthese services would not be funded by the NTC. The RTBs would develop theadmirnistLrative structure and training profiles as well as identify facilitieswhichi cani serve as RLDCs. In some regions this would require renovation offacilities, but in others an existing training center could become the RLDC ifit meets the NTC and RTB norms and guidelines and could be renovated at minimalexpense.

2.15 The NTC would provide professional leadership with a small executivesecretariat of sufficient numbers of suitably qualified professionals, with thedirector satisfactory to the NTC, for execution of the NTC mandate. Inaddition, the NTC would sub-contract for development of selected nationalservices needed by RTBs, including: (a) creation of data banks and proceduresfor job analysis, modular curriculum development and skill testing. Thesematerials would be made available at RTBs for use in program deveiopment andoperation as needed, but would not be mandated; (b) special studies to determinethe cost-effectiveness of adult training services; and (c) development of RLDCmanagement, evaluation and accreditation capacities.

2.16 In addition to training equipment, the project ,ould provide 111staff-months of fellowship and 105 staff-months of consulting services in orderto establish the institutional capabilities of the NTC, RTBs and RLDCs. SomeHungarian staff have acquired limited experience in this approach through theMiskolc training center set up under the IRP3. That pilot program is beingimplemented on schedule and is showing positive results, but the scale ofoperations in the proposed project wo-ld be much larger. Chapter III providesmore details of these implementation arrangements.

2.17 The NTC was established by an enabling decree of the Council ofMinisters issued in mid-February 1991. The government confirmed duringnegotiations that it would review with the Bank not later than November 30 ofeach year the proposed NTC and RTBs budget and programs for the following fiscalyear of the Borrower. Disbursements for goods under the adult training componentof the project would be conditional upon (i) the NTC budget having been adoptedfor the borrower's fiscal year ending December 31, 1991, (ii) operationalguidelines for regional training boards having been adopted and at least fourof these boards having been established and staffed, and (iii) the proposedprograms and budgets of these regional training boards having been adopted forthe borrower's fiscal year ending December 31, 1991.

iQ1These estimates are based upon the high unemployment scenario and OECDaverage figures about the percentage of the unemployed who need retraining.On this basis, the percentage of adult unemployed training needs met by thetraining capacity from this project would be about 7% in 1991 and risessteadily to about 20% by 1995.

- 1 5 -

lmproved Youth Training (Base Cost USS 60.0 million)

2.!8 Ihle project would support the upgrading of vocational secondaryschlooling, itl order to: (a) provide a better preparation for work in a changinglabor market that would require greater technological and basic skills, and (b)proiPote irnereased occupational choice. Some 20 model vocational secondarycenters would be developed, each center having about three schools. The conceptof ((lt eirs does not refer to a single large facility, but to a relatively smallgeogl-aphic catchment area which would serve a student population. There wouldthus )be about 60 schools involved, or about 15% of the total number ofvocatioital secondary schools. Criteria for the selection of the 20 centerswoul(i include, but not be limited to: availability of residential facilities,staff support, regional/local authority support for the proposed centers, equitybetween regions and availability of school infrastructure to support revised/newcurricula. The project would provide for training equipment and technicalassistance involving 65 staff-months of fellowships and 292 staff-months ofexpert consulting services.

2.19 The model vocational secondary schools would provide the basis forreforming the current vocational secondary schools and for phasing theapprentice schools, which would revert to the RLDCs, out of the public schoolsystem. A broad based curriculum (science, mathematics, language andcommunication skills, etc.) would be provided for 14 -16 year olds (grades 9-10). The MOE, with the involvement of local teachers, would develop curriculafor academic subjects in the vocational secondary schools and would also be incharge of finance and administration of these schools in cooperation withregional/local education authorities. The government would formulate detailedproposals on this cooperative arrangement within the framework of the recentLocal Government Act.

2.20 Vocational preparation would be introduced only in grades 11-12, andthe content of vocational preparation shifted from narrow specializations tobroader occupational clusters of skills. Thus, for example, students would notsimply learn to be an "electrical fitter", but would be exposed to wider skillsand background knowledge of phenomena related to electrical occupations.Vocational curricula would be developed under the direction of the MOLdepartment irn charge of youth training, with the assistance and cooperation ofoccupatir.ial advisory committees and the National Institutes for VocationalTraining and General Education, which are policy oriented research institutesattached to the MOL and MOE respectively. The project would support developmentand testing of up to 15 broad occupational curricula to be introducedselectively into new model vocational schools. None of the schools would offerall the 15 occupational curricula; the number of curricula in each school woulddepend upon costs so that the model schools could be repl'cated as part of alarger investment program. Specialized occupational training which is moredirectly 1__.. market oriented would be provided in programs sponsored underNTC/RTBs.

2.21 Thus a new model of vocational education would be develDed whichwould include:

(a) Defining procedures to develop vocational curricula, e.g., jobanalysis;

- 1 6-

(b) Developing new vocational training curricula for up to 15 skillclusters and Implementing three or four of them in each of thecenrters, leading to specialized training after 12th grade;

(c) Revising/developing seven basic education programs (mathematics,sciences, techniology, informatics, social studies, communicationsatid languages) and implementing them in all model schools in thecenters;

(d) Developing audio-visual laboratories in two centers to supportinstructLioral development activities;

(e) Improving guidance and counseling programs in all schools in the 20centers (in cooperation with the employment component);

(f) Improving bilingual education in selected vocational schools; and

(g) Improving training provided by five regional higher educationinstitutions in the fields of vocational teaching, counseling andadministration (the same training programs would serve counselorsand administrators in the employment services, adult training andyouth training).

2, Hieher Education and Research Program

Higher Education Reforms (Base Cost USS 87.1 million)

2.22 The GOH strategy in higher education and research is to expand thesector, improve its quality and implement a thorough institutional reform. Itsees all of these aspects as necessary to sustaining Hungary's economictransformation in the medium and long run. This is a large agenda and the COHof Hungary does not want to repeat the mistakes of central planning inimplementing its stra-.egy. This project, therefore, draws upon some of thelatest strategies for implementing higher education and research reforms in OECDcountries and in recent Bank projects in other regions (e.g., the recent FY91Science and Research Training Project in Brazil).

2.23 In order to gain maximum benefit from available investment spendingin higher education, the GOH has created a competitive funding agency, entitledthe "Catching-up-with-Higher-Education-in-Europe Fund" (CEF), which isautonomous from the MOE. The purpose is to provide incentives to institutionsof higher education for, inter alia, introduction of new programs, improvementin inter-institutional collaboration, and integration of research and teaching.The CEF would thus make a substantial contribution to the development andreorientation of Hungarian higher education.

2.24 The criteria and procedures for assessment of proposals by the CEFwere developed during preparation (See Annex 5 for details). Sample submissionsand initial draft proposals for the first round of competition were reviewed andfurther refined during pre-appraisal and appraisal respectively. Based uponthese sample submissions and initial draft proposals, the project would providefor equipment, rehabilitation of existing buildings, software and technicalassistance for the CEF secretariat's staff in the form of 860 staff-months offellowship and 100 staff-months of consulting services.

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?,2 ?S IImprovinig tthe financing and management of higher education isessential to the process of expanding enrollments. The curre-it fragmentationof funiditng mechanisiims (see para. 1.1/) would be replaced by a unified fundingsystem. This may not necessarily meani that all universities would come underthe same supervisory ministry, but tthe same principles and formulas would beapplieed to the varving circumstances of different universities. This unifiedmechanism would lay down necessary operating procedures for allocatinggovernment funds, including normative financing. By 1992, the governmentintends to progressively introduce normative financing to increase averagestuldent-staff ratios from 1:5 to 1:8. A new law defining the management andfinatncing of higher education is under preparation. During negotiations, thegovernment confirmed that it would submit by December 31, ;991, to Parliamentdraft laws providing for the autonomy of universities and colleges and amechanism for their normative financing. Technical assistance from universitysystems which have had experience with normative financing is included in theproject. The system of educational statistics, especially financial data, willalso have to be reoriented. It is very difficult under the present system todelineate clearly investment and recurrent financing, which is essential formonitoring and planning exercises. Technical assistance will be provided tohelp reorient the statistical system, and also for procurement training, projectpreparation, appraisal, and implementation, budget preparation, and performancereview. Chapter III provides details on the implementation of this component.

2.26 At a time of continuing cor.straints on the government budget,institutions would be encouraged to seek adlitional income from non-governmentalsources. Higher education institutions axe already allowed to retain revenueswithin their operat'.ng budgets. Many institutions have been carrying outcontract research for public enterprises, which has been a significant part oftheir revenue in the past decade. However, with the enterprises facing reducedsubsidies, this source of income is likely to be drastically reduced and othersources will need to be found. A feasibility study will be conducted to studythe scope for increased revenues and cost recovery in higher education,including such measures as:

(a) cost recovery in the form of partial tuition and other fees;

(b) incentives to encourage private donations;

(c) the possibility of use of vouchers, and the potential financial roleof local authorities.

The GOH confirmed during negotiations that it would: (i) carry out and reviewwith the Bank by June 30, 1992 a feasibility study on revenue generation andcost recovery in higher education; and (ii) take all measures required on itspart to ensure the improvement of cost recovery on the basis of the study'srecommendations, taking into consideration the comments of the Bank. A furtherstudy would assess ways to improve the efficiency of education, e.g., throughmore intensive use of facilities, and closing redundant establishments.

Foreign Language Training (Base Cost USS 17.6 million)

2.27 In keeping with the objective of increasing Hungary's international

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I lo (Irrii ties out s'i(it of its t raditionial CMEA framework, the GOH places highpriO itv (I11 dc.'-loli'i1 vxterisive foreign language fluency. The project wouldhel p to mIckt thlt' rapidl%v changing demand for foreign language skills and for

foreitgn ldIIi')age teach(rs resulting from Government language policy, which has

atbandoned the coinpuilsor%Y teaching of Russian, supports linguistic mAnorities andwishes to offer the choice of a foreign language from primary grade four. The

(:0l ant ieipatvs tthat the developmenit of such a framework will serve to attract

bilateral resources arid provide an effec. ve nmde for channeling domestic

re sourCtes.

2.28 The CEF will also implement this component and will earmark US$17.6

millioIt for foreign language (FL) training programs. Funding on a competitive

basis would be provided for proposals which address the following priorities for

F'. svstem clevelopimment: accelerated (3 year) and expanded teacher-trainingprov ision; reformim of State language examinations and introduction of regional

examinatiott centers wher-e foreign language examinations can be administered;

cuiriculum anid materials development; the development and provision of in-

service training and support (beginning with a program to retrain teachers of

Russian): the developmernt of more specialized and flexible full-time and part-

time programmes for further and in-service foreign language teacher training;

the establishment of university departments of applied-linguistics in each

region to strengthen university course development aimed at giving practical

fluency to students; the provision and expansion of university service

departments of foreign languages (for faculty, staff and students) to meet the

national target of all technical and professional graduates qualifying in at

least one foreign language from 1992 on; and the provision by these service

departments of language training to commerce, industry and the local community

on a cost recovery basis.

2.29 The project wouli :.upport the following institutional development

activities in foreign language training:

(a) strengthening cf tV secretariat of the CEF so that it can serve as

an instrument for ft.iiding and monitoring innovative foreign language

trainling programs o- a competitive basis;

(b) creation of a Natior..-' Council of Foreign Languages which would come

under the CEF, guie Coreign language policy and approve balanced

progiammes of regions' investment;

(c) development of bil n&ial vocational curricula in vocational

secondary schools anl of foreign language training within adult

t.aining. especially for small and medium scale entrepreneurs; and

(d) formulation and implemtntation of an investment program to retrain

Russian language teachers.

2.30 The final version of the decree and schedules incorporating the NCFL

were issued at th: end of November 1990 so that the NCFL Board members and

Secretariat could undertake the final review of the first round of competition

by December 31, 1990. These proposals, which were reviewed during appraisal,

and would commit the full US$17.6 million allocated to the Foreign Language sub-

component in the CEF. The CEF Secretariat would organize a workshop to assist

those institutions which need to reformulate their proposals in accordance with

- 19 -

NCFI. guidefl ines. Based upon the review of these proposals and the needs of theNCFL, the project would provide for equipment, 760 staff-months of fellowshipsand 500 staff inonths of consulting services.

Human Resources for Science and Technology Research (Base Cost US$ 48.0million).

2.31 The government has recognized the pressing need to preservehiungarv's scientific and technological capability, to modernize it, to manageit efficieit lv, and to link it to teaching and to commercial activity in sucha wav as to support the emergence of Hungary into Europe and into internationalmarkets. In line with the recommendations of the human resources review iJ, aseries of measures are in train to improve policy making and implementation;link research, education and commercialization; reverse the trend of outwardmigration and ageing of the scientific community; and improve the funding ofbasic science. These include:

(a) The establishment of a Science Policy Committee (SPC) chaired by theMinister without Portfolio. Members include the President of theHAS, the Chairman of the State Office of Technology Development(OMFB), and the Ministers of Finance and Education. The SPC willadvise the government on science policy and oversee the principalagencies implementing science policy and undertaking basic researchand applied R&D. The SPC is assisted by a Council for Science Policy(CSP) chaired by the Minister without Portfolio, which acts as thetechnical working group for the SPC. The CSP's membership includessenior officials of the HAS, OTKA, OMFB, the line ministries andinvited experts. The SPC and the CSP are supported by a sciencepolicy secretariat.

(b) The proposed establishment of an autonomous foundation to supportbasic science (OTKA). OTKA, which was established by a decree ofthe Council of Ministers on December 3, 1991, will replace asimilarly named research fund which has been managed since 1985 bythe HAS to support basic scientific research. During the period1985-90, this fund disposed of about 2.5% of the total Hungarian R&Dbudget (corresponding to about 9% of state budget R&D allocations)and supported over 1200 research projects. About 50% of the fund'scotal budget was used to support individual investigators, about 30%to finance instrumentation and informatics, and about 20% to financeinstrumentation centers. The funding system earned a good overallreputation within the country for fairness and efficiency and thelessons learned in administering the fund have been incorporated inthe design of the new OTKA. These include the need for autonomy indecision making, and for clear and transparent funding rulesincludiag a well established application procedure, feedback toapplicants and peer review. Accordingly, the President of OTKA, whowill be appointed by the Minister without Portfolio, will report tothe CSP. A nine-member governing council will compriserepresentatives of the HAS, Universities and the Ministries ofEducation, Agriculture and Social Welfare (which includes hospitalsand medical universities). Reporting to the president of OTKA will

Ibid., Reference 1, Report 8665-HU, Chapter 5

- 20 -

be three expert committees in natural sciences, life sciences andsocial sciences, with chairpersons elected by the relevantprofessional communities. The expert committees will delegate thereview process to suitably qualified peer reviewers in Hungary andabroad. OTKA's budget in 1991 is determined at Ft 1.8 billion.

(c) Preparation of legislation which will define the role of the HAS asan autonomous institution dedicated to the promotion of high qualityscience, ensure the autonomy of the universities, promote increasedcollaboration between institutions of higher education and the HASin postgraduate education and research, and reform the scientificdegree system so that universities and the HAS, rather than aseparate organization, will award postgraduate degrees. Duringnegotiations, the government confirmed its agreement to introduceto Parliament by December 31, 1991 draft laws providing for: (i)the autonomy of the HAS and (ii) the reform of the system ofadvanced training for scientists and the awarding of scientificdegrees.

2.32 The project would strengthen the institutional and financialcapacity of OTKA to improve the training of research scientists and engineersas well as the quality of research in Hungary by: (a) supporting research byyoung scientists; (b) upgrading and expanding the network of scientificinstrumentation centers; and (c) developing the national R&D computer netwo'rk(IIF) used by the academic and industrial research communities.

2.33 Young Scientists Sunnort Program (USS3.7 million). The Hungarianscientific community is ageing. Between 1972-87, there was a decline in theproportion of researchers below the age of 29 from 23% to 13%, and an increasein those between 50-59 from 10% to 19% (see Annex III, Table 3). By 1985, theaverage age of Hungarians holding the D.Sc. degree was 53, while that of thoseholding the equivalent to a PhD was 48. There is also an accelerating braindrain of scientists. Some 15% of Hungarian scientific researchers are nowworking outside the country, and of these, one-quarter do not return within fiveyears. Hungarian scientists are emigrating in part because of the betteropportunities in other countries and in part for lack of opportunity (especiallyfor younger Hungarian scientists). Research grants have been heavily weightedin favor of established scientists and institutions.

2.34 To improve opportunities for younger scientists, the project wouldfinance through OTKA about 200 grants to promising researchers under the age of35. Funds would be used to purchase small items of research equipment, books,research materials and foreign travel for conferences and study. The proceduresfor review of proposals and award of grants are summarized in Annex 6. Threecompetitions would be held in the years 1991, 1992 and 1993. Awards would begranted in September of each year. In December of each year of the competition,OTKA would provide for Bank review an evaluation of that year's competition,together with proposals for improving the next year's competition.

2.35 Scientific Instrumentation Centers (USS 24.1 million). Since 1985,eleven instrumentation centers have been created to provide Hungarianresearchers in various institutions with access to sophisticated instrumentsthat are too expensive for any single investigator or institution. The centersare attached to a university or research institute. Other scientific and R&Dinstitutions share use of the equipment and jointlv pay the running and mainte-

- 21 -

nance costs. The capital costs were borne by the HAS managed research fund

(OTKA). The system has proved cost-effective in improving access to expensive

instrumentation, and in enhancing cooperation amongst scientific institutions.

2.36 The project would support an expansion and upgrading of the

instrumentation centers through an open competition which would be run in 1991

and 1992. Bids would be invited from existing centers and from institutions for

the following purposes: a) developing existing centers, or establishing new ones

(including renewing or upgrading existing instrumentation); and b) supporting

research projects using existing centers. Criteria for inviting proposals are

stipulated in Annex 7. Proposals would be judged by expert peer review

supervised by the relevant OTKA expert committee. The results of each

competition would be published, and unsuccessful applicants would be provided

with feedback so that future applications for funds could be improved. Awards

would be granted in September of each year. In December of each year of the

competition, OTKA would provide for Bank review an evaluation of that year's

competition, together with proposals for improving the next year's competition.

2.37 R&D Computer Network (IIF) (US$ 20.2 million). Access to

international data bases and international communications networks are essential

if Hungarian science and R&D are to contribute effectively to technological

competitiveness. Starting in 1986, the Program Bureau of The Computer and

Automation Institute of the HAS (SZTAKI) has successfully implemented an initial

phase of an R&D computer network (IIF) supporting Hungarian universities,

research institutes and R&D facilities. Intelligent terminals, PCs, Local Area

Networks and a packet switching communication system have been installed. About

200 institutions and some 1500 users are expected to be connected by the end of

1990. Adequate criteria have been developed to determine eligibility for

inclusion of new users. An important second phase, made possible by the easing

of COCOM restrictions, would include: expanding the user network to include

another 300 institutions and up to 2000 users, assisting integration of

institutions of higher education and research establishments through shared

information services, accessing international data bases and expanding the use

of electronic mail.

2.38 The R&D Infrastructure Coordinating Bureau of OTKA has prepared a

five year investment program for the IIF designed to develop: (a) the hardware

and software services which would allow increased user access to the IIF; (b)

the information services (regional computer centers, message handling

facilities, data bases and library services); (c) international network

connections; and (d) training of systems personnel and users. Further details

concerning the IIF management system are available in the project files. The

project would support the acquisition of computers (mainframes, minis and PCs),

associated communications hardware and software, technical assistance and

training. Outline equipment specifications have been prepared and reviewed by

the Bank. Project funds would be channelled through OTKA, but the project would

be managed by the R&D Infrastructure Coordinating Bureau, which has the

technical and management skills te implement the second phase.

D. Environmental Impact

2.39 The project has been classified as C: "No appreciable environmental

impact" However, environmental considerations will feature prominently among

the criteria to be used to select sub-projects for funding under the higher

education fund (CEF) and the OTKA fund. Attentior would also be given to

- 22 -

appropriate waste disposal from laboratories.

III. COSTS. FINANCING. IMPLEMENTATIvd. PROCUREMENT AND DISBURSEMENT.

A. Project Costs.

3.1 Overview. Total project costs by component (see Table 3.1) areestimated at US$339.8 million, of which US$150 million would be foreign exchangecosts financed by the Bank loan. Total costs include equipment, software,fellowships, consultants, minor rehabilitation of existing buildings, and staffand consumable materials during implementation. Project costs by types ofexpenditure categories are shown in Table 3.2. Annex 8 shows details ofassigned quantities and costs by year and activity.

Table 3.1: PROJECT SUMMARY BY PROJECT ITEM

--- Forint Million ---- ---- USS Million -- %Base %ForeignLocal Foreign Total Local Foreign Total Costs Exchange

A. IMPROVED LABOR PROGRAM

Statistical Programs 96.7 59.6 156.2 1.4 0.8 2.2 11 38XLabor Market Analysis 139.7 46.1 185.8 2.0 0.6 2.6 1X 251Employment Services 155.2 80.2 235.4 2.2 1.1 3.3 11 34%

Sub-Total Labor Programs: 391.6 185.9 577.5 5.5 2.6 8.1 3% 32%

B. ADULT TRAINING

NTC Operations 3,384.6 42.0 3,426.6 47.7 0,6 48.3 17% 1%Regional Trg. Board Programs 22.4 1,364.5 1,387.0 0.3 19.2 19.5 7% 98%

Sub-Total Adult Training: 3,407.0 1,406.6 4,813.6 48.0 19.8 67.8 23% 29%

C. IMPROVED YOUTH TRAINING

Model Voc. Secondary Schools 2,134.0 2,122.9 4,256.9 30.1 29.9 60.0 21% 501

Sub-Total Youth Training: 2,134.0 2,122.9 4,256.9 30.1 29.9 60.0 21% 50%

D. HIGHER EDUCATION

Higher Education Reforms 2,714.0 3,467.9 6,181.9 38.2 48.8 87.1 30% 56%Foreign Language Training 532.5 717.1 1,249.6 7.5 10.1 17.6 6% 57X

Sub-Total Higher Ed & Res. 3,246.5 4,185.0 7,431.5 45.7 58.9 104.7 36% 56Z

E. HR for SCIENCE AND TECHNOLOGY

Young Scientists Supp. Program 120.7 142.0 262.7 1.7 2.0 3.7 1% 54%Scientific Instrument Centers 1,001.1 710.0 1,711.1 14.1 10.0 24.1 8% 41%R&D Computer Network 1,022.4 411.8 1,434.2 14.4 5.8 20.2 7X 29%

Sub-Total Science and Tech. 2,144.2 1,263.8 3,408.0 30.2 17.8 48.0 17% 37%

Total Base Costs: 11,323.3 9,164.2 20,487.5 159.5 129.1 288.6 100% 45%Physical Contingencies: 681.6 551.6 1,233.2 9.6 7.8 17.4 6% 45%Price Contingencies: 1,470.0 932.6 2,402.6 20.7 13.1 33.8 12% 39%

TOTAL PROJECT COSTS 13,474.8 10,648.4 24,123.2 189.8 150.0 339.8 118% 44%

3.2 Project Component Designs. In terms of costing and implementationdesigns, project components follow two different patterns: (a) detailed and ex-ante costed sub-components; and (b) the establishment of funds in support of

- 23

competitive sub-projects.

(a) Detailed Component Design. Most of the labor, adult and vouthtraining program components shown in Table 3.1 have been costed as

traditional, fully identified sub-components. For examnple, the labor

statistics program would be implemented as a fully prepared sub-project.However, the NTC, RTB's and RLDC's would operate many programs on a sub-

contract basis which could include degrees of competition as the situationdemands. Private sector vendors could also be sub-contracted to provide

training services where it is judged that they would be the most effectivesources.

Table 3 2 PROJECT COST SUMMARY BY CATEGORY OF EXPENDITI'RE

--- Forint Million ---- -- USS Million -- %Base %ForeignLocal Foreign Total Local Foreign Total Costs Exchange

A. TECHNICAL ASSISTANCE COSTS

Fellowships 0.0 1,199.0 1,199.0 0 0 16 9 16.9 6% 100%

Consultants 261 5 774.0 1,035 5 3.7 10 9 14.6 5S 75%

Sub-Total Technical Assistance: 261.5 1,973.1 2,234.5 3 7 27.8 31.5 11S 88S

B. EQUIPMENT, SOFTWARE AND RESEARCH

Equipment 2,504.5 6,307.1 8,811.6 35.3 88 8 124.1 432 72SSoftware (Including Books) 284.0 742.0 1,026.0 4.0 10.5 14.5 5% 72%Research 120.7 142.0 262.7 1.7 2 0 3.7 1X 54Z

Sub-Total Eqt, Raes. and Software: 2,909.2 7,191.1 10,100.3 41 0 101.3 142.3 49% 71%

C. BUILDING FACILITIES

Sub-Total Building Facilities 5,492.7 0.0 5,492.7 77.4 0.0 77.4 27% 0%

D. STAFFING/RECURRENT COSTSnf- _ _ . -=- -

Sub-Total Staffing/Recurrent 2,660.0 0.0 2,660.0 37.5 0 0 37.5 13S 0%(Including Consumable Materials) ----- ----- ----- ----- ----- -----

Total Base Costs: 11,323.3 9,164.2 20,487 5 159 5 129 1 288 6 100% 45%

Physical Contingencies: 681.6 551.6 1,233.2 9 6 7.8 17.4 6% 451

Price Contingencies: 1,470 0 932 6 2,402.6 20.7 13.1 33.8 12% 39%

TOTAL PROJECT COSTS 13,474.8 10,648.4 24,123 2 189 8 15^ 0 339 8 118% 44X

(b) Competitive Funds. The project's financing of the CEF (includinglanguage training), the Science Instrument Centers, and the YoungScientists Support Program would be on the basis of competitive fundingof sub-projects prepared, appraised and implemented in accordance with

criteria and procedures agreed with the Bank (see Annexes 5, 6 and 7).

MOE has had some prior experience with competitive funding in highereducation through a higher education development fund, and OTKA hasoperated successfully as a competitive research funding agencv since 1986.

The principal lesson learned from the MOE experience is, that thetemptation to distribute education funds equally among institutions mustbe resisted. This lesson -- that not all institutions can get a littlebit of the pie -- has been fully taken into account in the design of the

- 24 -

proposed funding criteria, guidelines and award procedures of the CEF.In line with the restructuring of the HAS, OTKA would become independentof the HAS and would revise its operating guidelines, including interna-tional participation by prominent non-Hungarian scientists on its reviewpanels. The Scientific Instrumerntation Centers would prepare newprocedures for competitive applications for use of scarce and relativelyexpensive equipment. The management of these instrumentation centerswould also be strengthened with technical assistance financed under theproject. During negotiations the Government provided assurances that: (a)the criteria, guidelines and procedures for awards of grants/allocationunder the CEF, the Scientific Instrument Centers and the Young ScientistsSupport Program would be those agreed with the Bank as stipulated inAnnexes 5, 6 and 7; and (b) future changes to, or introduction of newcriteria, guidelines and procedures would be subject to Bank endorsementprior to their introduction and implementation.

3.3 Bases of Costs Estimates. The bases of the cost estimates are asfollows: (a) unit costs of consultants and fellowships are derived fromcomparable costs of ongoing staff training, consultancy and exchange programswith Western European and North American countries; (b) equipment lists andoutline specifications have been prepared for about 80Z of the labor andtraining components and for the Science Information Network while remainingequipment costs are based on Bank staff estimates; (c) software costs are basedon comparisons with ongoing software development activities and estimatedrequirements for books and journals; (d) construction costs are based on recentcosts of remodelling training institutions; and (e) staff unit costs are basedon public sarvice salary scales. The amounts of differing types of expendituresto be funded under the CEF and the OTKA funds are based on reviews of sampleapplications which were developed prior to appraisal, and reviewed by theappraisal mission.

3.4 Project costs include an estimated US$10.0 million in taxes onconstruction and goods. Project costs include contingency allowances forunforeseen physical additions (US$17.4 million), equal to 10% of the estimatedcost of all project items except the CEF and the Young Scientists SupportProgram Funds, which do not include physical contingencies. Price contingenciesbetween negotiations (February 1991) and the end of project implementation areestimated at US$33.8 million equivalent, or 11% of base cost plus physicalcontingencies. Total contingencies represent 18% of the base cost. Because ofthe large divergence between the estimated foreign and local inflation rates,price increases have been applied to both foreign and local costs at an annualrate of 3.6%'", and at a fixed exchange rate of US$1.00=Ft7l.

21 The annual inflation rate for the Forint is estimated at 35I in 1991, 201 in 1992, 102 in 1993, 7% in1994 and 5S thereafter. Using these inflation rates, a calculation of project costs expressed in Fotintswould show a large increase in price contingencies as outlined below. This calculation is of importanceto estimate the Forint amounts required for the local currency portion of the project.

---- Forint Million ----Local Foreign Total

Total BEase Costs: 11,323 9,164 20,487Physical Contingencies 682 552 1,233Price Ccntingencies 9,982 7.48C 12. 62

TCTAL PRO.ECT COSTS 21,C87 '3.196 34.283

- 25 -

3.5 The foreign exchange component was estimated as follows: (a)

fellowships - 100%; (b) consultants - 75%; (c) equipment 72%; (d)

software/books/journals - 72%; (e) remodelling buildings - 0%; (f)

salaries/consumables - 0%; and (g) research projects - 54%.

3.6 Recurrent Costs. Under the proposed project only modest additional

recurrent costs would be generated. The recurrent costs of the employment

services and adult training programs would continue beyond the project

completion date in 1996 at Ft 0.65 billion compared to projected total

government recurrent expenditures Ft 1617.8 billion in that same year (.04%) S.

However, many of the staff working in employment services and retraining will

be redeployed from other jobs in the MOL or in the National Planning Office, and

the recurrent cost figures for the employment and training programs do not

reflect these savings. The incremental recurrent costs of the model vocational

secondary schools would be minimal since this component involves reform of

school programs without expanding the total number of schools and teachers.

Enrollments in the secondary schools overall would decline as the demographic

bulge goes into the labor force, thus leading to a net reduction in recurrent

costs at the secondary school level. Although it is difficult to predict the

incremental recurrent costs for the sub-projects under the competitive grant

programs of the CEF and OTKA, more efficient use of resources is one of the

criteria for awarding grants and this would help in reducing unit recurrent

costs.

Proiect-Financinz

3.7 The Ministry of Finance (MOF) would treat the proposed project funds

as additional resources to participating project institutions, i.e., the

ministries involved in the project would have their normal recurrent budgets

increased above the 1990 levels as a result of Bank finances supporting the

project. The rationale for treating project funds as additional is that

education spending, which has been low, is now a priority in the government

budget.

3.8 The proposed Bank loan of US$150.0 million would finance the foreign

exchange component of the project. The Government would finance the balance of

project costs. Project financing would be in accordance with Table 3.3. In

order to facilitate the completion of appropriate technical assistance

agreements, and to facilitate the further development of project preparation

activities, retroactive financing of up to US$5.0 million would be included to

cover the cost of minor equipment and specialist services necessary for timely

project start-up. Rttroactive financing would be limited to expenditures

incurred prior to loan signing but after November 1, 1990.

2'3See the FY90 Structural Adjustment Loan report (No. P-5337-HU), p.44, Table

7 of Annex 1 for projected government current expenditures.

- 26 -

Table 3.3: FXRAINCG PLAN BS DIMJT CT(US$ Million)

World Government of TotalBank Hungary

Amount S Amount X Amount S

Foroign Investment;

Consultants Services 11.9 66 6 1 34 18 0 5Fellowships and Research 20.0 100 0.0 0 20.0 6Goods (Adult Training) 23.2 72 8.8 28 32.0 9Goods (Other Parts) 92.8 72 35.3 28 128.1 38

Sub-Total, Foreign Investment 147.9 75 50.2 25 198.1 58

Research Support:

Young Scientists Supp. Program 2.1 54 1.8 46 3.9 1

Sub-Total, Research 2.1 54 1.8 46 3.9 1

Local Costs:

Construction 0.0 0 92.3 100 92.3 27Staff, Operat. and Maintenance 0.0 0 45.5 100 45.5 13

Sub-Total, Local Costs 0.0 0 137.8 100 137.8 41

Total Disbursements 150.0 44 189.8 56 339.8 100

B. Implementation.

3.9 Each project component would typically be implemented by the staffin the existing line agencies or in secretariats attached to national councilsthat are being established to carry out policy objectives under the variouscomponents of the project. These staff would be responsible for the following:

(a) Drafting of TORs and bidding documents for technical assistance.For large tasks (i.e. exceeding about US$100,000), three contractorswith expertise in that particular field would normally be invitedto submit bids for a package of technical assistance (specialistservices and fellowships). Such bids would in the first instancebe evaluated on merit, with price comparisons/negotiations conductedseparately from the merit evaluation. Contracts for smallertechnical assistance tasks could be awarded following negotiationswith suppliers. The proposed TA packaging is shown in Annex 8;

(b) A second function of these staff would be to identify and tap localexpertise in activities such as the drafting of schedules for avariety of project activities, preparation of equipment lists andspecifications, and conducting procurement on an internationalscale. To assist the various units in carrying out these duties,about 3 man-months of specialist services and 6 man-months oftraining seminars in project management and procurement methods foreach of the four implementing agencies (i.e. the MOL, the NTC, theCEF Secretariat and the R&D Infrastructure Coordinating Bureau)would be included in the project. Local expertise from existing

- 27 -

foreign trading companies would also be hired on a contract basisto train staff or conduct procurement; and

(c) These staff would also: (a) prepare financial and physical forecastsabout future actions required to implement their parts of theproject, (b) collect, collate and disseminate information aboutprogress, and (c) prepare reports and maintain liaison with allinterested parties, including the Bank.

ImRlementation of the Employment and Training Component

3.10 The MOL and the NTC, the implementing agencies for Employment andTraining programs, would both need institutional strengthening. MOL (formerlythe State Wage and Labor Office, SWLO) is still being organized and would needconsiderable assistance in order to carry out its new functions. In order torapidly organize the recently created NTC, the project would provide technicalassistance in program development and evaluation, procurement of equipment andservices, and other activities essential to successful project implementation.In addition to the technical expertise required for procurement (para 3.9.(b)),the government has requested assistance from the EEC to: (a) develop the MOLprogram implementation capacity and (b) establish the NTC. Terms of Referencefor this technical assistance have been prepared.

3.11 The MOL would implement the Employment Information and ServicesComponent. It would also take lead responsibility in developing the vocationalcurriculum of the model vocational secondary schools in the Youth Trainingcomponent and work with the MOE and regional/local education authorities toensure coherence with overall elucation programs. The professional departmentswould receive support from an Administrative Support Unit in the newlyestablished Department of International Relations in the MOL to carry out keyimplementation and monitoring activities, e.g., preparation of tender documents,arranging visits of external consultants, preparing accounts and audit reports,etc. During negotiations the government confirmed that it would staffadequately and provide other resources to the relevant professional departmentsof MOL to ensure successful implementation of: (i) industrial adjustmentservices, occupational and educational information; (ii) aptitude and interestassessment, career information systems development and user training; and (iii)job search and development.

3.12 The NTC would implement the Adult Training component. The RTBswould initiate and supervise adult training pr-grams. The project would includetechnical assistance to establish the NTC and RTBs. RTBs in the mosteconomically depressed areas would be established first, with emphasis on

modifying and using existing training capacity. RLDCs would be developed toprovide the multi-functional employment and training services currently lackingin the Hungarian training system.

3.13 During negotiations, the governr:ent confirmed that it would staffadequately and provide other resources to the relevant professional departmentsof the MOL to implement the new vocational secondary school curriculum. Thesestaff (to be appointed by Minister of Labor) would act as facilitators and

- 28 -

liaison officers across existing departments and with the staff of the MOE.They would develop terms of reference for technical assistance contracts andequipment, coordinate procurement activities among MOE, government and Bankofficials, monitor expenditures and reports to the government and the Bank.

3.14 National programs for developing curricula, and for counselIng andtraining teachers at project schools would be developed as a first priority.The MOL would establish teams of Hungarian and foreign experts to develop theseprograms, or sub-contract these activities to selected institutions. Theseprograms and curricula would be implemented at project schools where leadinstructors and administrators would work with the national teams to implementthe new programs.

Implementation of the Higher Education and Foreign Lanruaze Components.

3.15 The CEF, which was established on December 29, 1990, by a Decree ofthe Council of Ministers, is controlled by a Managing Committee, headed by theMinister of Education. This Committee, consisting of 15 to 20 members, willinclude two MOE nominees, a representative of the Parliamentary sub-committeeon education, one nominee each of the Conferences of University and of CollegeRectors, a nominee of the Hungarian Academy of Sciences, a nominee of the Unionof University Staff, nominees from other ministries, a nominee each from apublic and a private enterprise, and about five local and foreign independentmembers.

3.16 The Committee would invite bids for, and select on a competitivebasis, sub-projects from among proposals submitted by higher educationinstitutions in Hungary. Draft Criteria and Guidelines for the selectionprocess have been prepared and are summarized in Annex 5. The committee wouldas necessary appoint independent referees to evaluate submissions. Sample trialsubmissions were reviewed and commented upon by a Bank mission in June 1990, aswere the initial drafts of the first formal round of submissions duringappraisal in October, 1990. These will be finalized to enable the ManagingCommittee to review them and make a final selection prior to Loan Effectiveness(June 1991). This would be followed by two more rounds of competitions in thenext two academic years. Winning bidders would be authorized (thr.'. - letterof credit) to incur expenditures up to a stated foreign exchange and Forintlimit, which would enable them to enter into the necessary procurementtransactions.

3.17 An Executive Secretariat with 6 full-time professionals has beenestablished within the MOE to assist the CEF Managing Committee in carrying outthe necessary day-to-day administrative and managerial functions relating to thecontrol and operation of the CEF. The Secretariat would be strengthened withtechnical assistance as outlined in para 3.9.(b). The following duties wouldbe among the key tasks of the Secretariat:

(a) Organize meetings of the CEF Managing Committee and carry out itsoverall mandate;

(b) Invite bids from among eligible Higher Education and ResearchInstitutions, including issuance of the necessary information andguidelines therefore;

)9

(c) A!.5i st t hl (iCF Mai agi I , Commii ttee in th e acnini strat ile work ofcarl-Villg Out the evalu ation aniid selection process.

(d) Itiforin successful bidders of their selection, make the contents ofthie wininiing bids known to all eligible bidders, and enter inito acontract with the selected bidders;

(e) Vlien warranted, inform non-select.ed bidders about the rationale forsuch non-selection, and -- when appropriate -- prepare guidance asto how such bids might be strengthened for inclusion in a laterround of bids.

(f) Record and monitor commitments and expenditures made under the CEF,verify and authorize payments (trom a Special Account and a Localcurrency account to be created under the project as described below)for eligible expenditures submitted by the winners of successfulbids.

(g) Verify adherence to the rules and regulations governing the CEF,including adherence to agreed criteria, expenditure targets andprocurement rules, and hire the necessary local and foreignexpertise to ensure compliance.

(h) Conduct (with the assistance of the experts in (g) above ) trainingseminars in the methodologies of the preparation of applications,and relevant procurement methodologies for the benefit of actual orpotential beneficiaries of the CEF.

(i) Prepare periodic progress reports for interested parties (includingthe Bank), and maintain the necessary liaison with these parties.

3.18 The CEF Managing Committee would have thre foreign languagespecialists (50% of the total number of CEF professional staff (para 3.17) tohelp it carry out its supervision of the foreign language programs. Newprograms would be funded on a competition basis according to foreign languagetraining objectives and proposal guidelines prepared by the CEF. The foreignlanguage training sections of the MOE would also provide administrative,planning and statistical support to the CEF secretariat to minimize the need fora large staff in the CEF.

Implementation of Science and Technology Research

3.19 Project Implementation of the three S&T sub-projects(instrumentation centers, IIF and young scientists) would be delegated by OTKAto its R&D Infrastructure Coordination Bureau, which has gained experience ofproject implementation during the first phase of IIF development, and of Bankprocurement procedures from its prior involvement in the FY88 TechnologyDevelopment Project (Loan No. 2966-HU). The functions of this Bureau wouldinclude: preparing detailed time schedules and plans for each of the three sub-projects (equipmiont centers, IIF and young scientists); assisting with implemen-tation of individual project components (tendering procedures, arranging

- 30

itistaI.Iatiori of e(quipment , administration of related technical assistarnce etc.);ass i ; ting OTKA as necessary with implementation and evaluation of thecomipetit ioils; monitoritng progress of the three sub-projects, and preparingre'pOItts as necessary to OTKA and the Bank.

32(0 Technical Assistance. Eighteen staff months of expert serviceswouild he provided for: a) technical studies, specification, developmentplanining, software development, and management development of the IIF andinlstrulmU1entation centers; and b) expert evaluation of proposals for OTKA funding,sciep('e pol icy studies, R&D management and program evaluation. Starting in July1991, zand at six-monith itntervals thereafter, OTKA would provide for Bank reviewits proposals for the use of expert services for the following 12 months. TheR&D Infrastructure Coordination Bureau would administer expert contracts.

C. Procurement.

3.21 Implementing Government Departments in the MOL, NTC, MOE andparticipating institutions of Higher Education and Research, would each beresponsible for organizing their own equipment procurement, assisted asnecessary through technical assistance (para 3.9.(b)). To assist MOL and NTCin the procurement of equipment for the adult and youth training programs, atechnical assistance firm, specializing in procurement, would be selected on acompetitive basis in accordance with the procedures outlined in para 3.22. Theselected firm would advise on procurement and provide training to MOL and NTCstaff in the principles and techniques of procurement. The National Bank ofHungary (which has extensive experience in the subject) would also helpimplementing institutions in understanding and carrying out procurementfollowing World Bank guidelines for the procurement of goods and consultants.Procurement of goods to be financed from the proceeds of the proposed loan wouldbe as follows:

(a) International ComDetitive Bidding (ICB) is expected to be used forthe procurement of bid packages for equipment with an estimatedvalue of US$300,000 and above each. This method of procurement isexpected to cover about 80% of project financed equipment.Hungarian enterprises competing under ICB would be eligible for a15% preference on the CIF value of the bids, or the amount ofcustoms duties, whichever is lower. Standardized bidding documentsthat have been prepared through collaboration between a variety ofHungarian Government agencies and the World BankL4J would be used asthe basic bidding documents for ICB.

(b) Limited International Bidding (LIB) and International ShoRRinQ (IS).LIB would be used for the procurement of sophisticated scienceequipment (where only a limited number of suppliers exist), while

!JThese documents, which are suitable for bidding on a variety of equipmenttypes, such as general goods, computers and electronic instruments etc. areavailable on request from the National Bank of Hungary.

- 31

IS would be used for small amounts of equipment where the cost of

I, would clearly outweigh possible price gains. Bids would beinvit.ed from at least three suppliers in at least three eligiblecountries. LIB and IS could be used for equipment bid packages with

an estimated value below US$300,000 each, and aggregating less than

20% of the value of project financed equipment (US$20.8 million).

Itie US$300,000 limit on individual bids could be waived in

exceptional circumstances (by an exchange of communications between

tthe Government and the Bank) in instances where the unit cost of

items suitable for this type of procurement method exceeded

US$300,000).

(c) Direct Contractine would be used where equipment standardization

requirements or licenses so warrant, or in the acquisition of

intellectual properties. Under the proposed project, the main items

to be procured under this procedure are intellectual properties,such as books, computer software, patents and copyrights (US$15.9

million).

Locally financed expenditures for works (US$92.3 million), and locally financed

goods and materials (US$39.6 million) would be procured under prevailing local

procedures which involve competitive bidding and which are judged satisfactory.

3.22 Procurement of Technical Asslstance, Qualified firms would be

invited to submit bids for comprehensive packages of consultant services and

fellowships in accordance with the Guidelines for the Use of Consultants by

World Bank Borrowers and by the World Bank as Executive Agency (August, 1981).

There would be a total of eight packages for technical assistance (see Annex 8

for details by sub-component).

3.23 Procurement Summary. Table 3.4 below is an indicative summary of

the proposed procurement arrangements under the project.

32 -

Table 3.4: PROCUREMENT ARRANGEMENTS /a(US$ Million)

28-Feb-91 ------- ------- ------- ------- -------09 59 ICB LIB OTHER/b N/A TOTAL

Fcreign Irvestment

lechnical Assistance 38.4 38 4(32.3) (32.3)

Eq.aipment 83 3 20.8 39.6 143.8(83.3) ;20.8) (0.0; (104.2)

Scftware (Including Books) 15.9 15.9(11.4) (11.4)

Research Sipport

Your.g Scientists Supp Program 3.9 3.9

(2.1) (2.1)

Local Costs:

Construction 92.3 92.3(0.0) (0.0)

Staff, Operat. and Maintenance 45,5 45.5(0.0) (0.0)

Total Financing Requirements 83.3 20.8 190.1 45.5 339.8Total Bank Financing (83.3) (20.8) (45.8) (0.0) (150.0)

/a Figures in brackets are the respective amounts financed by the Bank Loan/b See para 3.21.(c).

D. Disbursements.

3.24 Disbursements would be made to cover:

(a) 100% of foreign expenditures (C.I.F) and 100% of local expenditures(ex-factory) for equipment and materials;

(b) 100% of foreign expenditures for intellectual properties, such ascomputer software, books, and journals;

(c) 100% of the foreign expenditures of research contracts (YoungScientists); and

(d) 100% of the costs of overseas fellowships and of the foreign costsof foreign consultancy services.

Disbursements will be administered by the National Bank of Hungary. Withdrawalapplications will be fully documented, except for expenditures against contractsvalued below US$300,000 equivalent which would be made on the basis of certifiedstatements of expenditure (SOE). Supporting documentation in these cases wouldbe retained by the National Bank of Hungary for at least one year after receiptby the Bank of the audit report for the year in which the last disbursement wasmade. This documentation would be made available for review by the auditors andby the visiting Banik staff upon request.

- 33 -

3I.>1) In order to facilitate project implementation, the borrower wouldestablish a Special Accounit in US Dollars at the National Bank of Hungary tocov-r the Bank's share of eligible expenditures. The authorized amount of theaccounit will be US$10 million, representing the average of four months ofexpe,nditures. The special account would be replenished monthly, or at thelatest every four months, or whenever one third of the authorized amount hasbeen withdrawn, whichever occurs earlier. Documentation requirements forreplenishment applications would follow the same procedure as described inparagraph 3.24. In addition, monthly bank statements of the special accountwhich have been reconciled by the borrower should accompany all replenishmentrequests. Records of the Special Fund would be: (a) maintained by the Borrower;(b) audited annually; and (c) made available to visiting Bank mission uponrequest.

3.26 With the exception of the country pro'ile for Hungary, there are noreadily comparable disbursement profiles. Project preparation by HungarianWorking Parties has taken place at a very fast pace during the politicallyvolatile period of 1989-90. Because of this rapidly advancing projectpreparation, the estimated disbursements are expected to be slightly faster thanthe country profile (about five years). Disbursements are expected to peak inthe second and third years and tail off in the fourth and fifth years. Adisbursement schedule reflecting this is shown in Annex 9. The project wouldbe scheduled for completion by December 31, 1995 and the Closing date would beJune 30, 1996.

E. Audits and Reports.

3.27 All institutions participating in the project, or its sub-projectswould submit semi-annual progress reports and annual statements of expendituresto MOF, which would in turn prepare summary progress statements. All projectaccounts, revolving funds, statements of expenditures and project beneficiarieswould be audited at the end of each fiscal year by independent auditorsacceptable to the Bank. During negotiations the government confirmed that: (a)progress reports would be submitted semi-annually; (b) annual audits ofacceptable scope and quality would be carried out by independent auditorssatisfactory to the Bank; (c) annual audit reports for the preceding fiscal yearwould be made available to the Bank no later than by June 30th each year; and(d) a mid-term review of the project's progress would be carried out by the Bankand the Borrower by the November 30, 1993.

IV. BENEFITS AND RISKS.

4.1 Benefits. The project's major benefit would bce to promote a quickand flexible supply response to the economic reforms currently being carriedout. Employment services developed by the project would assist in thealleviation of unemployment and the productive re-deployment of labor.Hungary's base of skilled workers and professionals would be expanded andimproved to the level required for it to compete successfully in a European

- 34 -

framework. The national capacity for research and technological development,with an enhanced capability to respond to changing market needs, will beincreased through the HE and STR components of the project,

4.2 Risks. The major risks are: (a) that the past fragmentation in theeducation and training system has resulted in bureaucratic vested interestswhich may try to preserve their spheres of control and delay implementation; and(b) newly created agencies would have inadequate experience to implement majorcomponents. The first risk is being addressed by providing a sufficient amountof financing to induce effective participation and sharing of resources amongthie project beneficiaries, *ihile the second risk is being addressed byincorporating technical assistance to strengthen institutional performance.

- 35 -

V. AGREEMENTS REACHED AND RECOMMENDATIONS

A. Agreements Reached during Negotiations

5.1 During negotiations the government gave assurances that:

(a) the system of unemployment monitoring implemented in January 1991would be continued on at least a quarterly basis (para. 2.5);

(b) it would revi3w with the Bank not later than November 30 of eachyc-ar the proposed NTC and RTBs budget and programs for the followingfiscal year of the Borrower (para. 2.17);

(c) it would staff adequately and provide other resources to therelevant professional departments of MOL to ensure successfulimplementation of: (i) industrial adjustment services, occupationaland educational information; (ii) aptitude and interest assessment,career information systems development and user training; and (iii)job search and development (para. 3.11); and

(d) it would staff adequately and provide other resources to therelevant professional departments of the MOL to implement the newvocational secondary school curriculum. These staff (to beappointed by Minister of Labor) would act as facilitators andliaison officers across existing departments and with the staff ofthe MOE. They would develop terms of reference for technicalassistance contracts and equipment, coordinate procurementactivities among MOE, government and Bank officials, monitorexpenditures and reports to the government and the Bank (para.3.13).

5.2 During negotiations the Government also gave assurances that itwould:

(a) submit by December 31, 1991, to Parliament draft laws providing for:(i) the autonomy of universities and colleges and a mechanism fortheir normative financing, (ii) the autonomy of the HAS, and (iii)the reform of the system of advanced training for scientists and theawarding of scientific degrees (paras. 2.25, 2.31(c));

(b) (i) carry out and review with the Bank by June 30, 1992 afeasibility study on revenue generation and cost recovery in highereducation; and (ii) take all measures required on its part to ensurethe imj -ovement of cost recovery on the basis of the study'srecommendations, taking into consideration the comments of the Bank(para. 2.26); and

(c) (i) use the criteria, guidelines and procedures stipulated inAnnexes 5,6, and 7 for awards of grants/allocation under the CEF,the Scientific Instrument Centers and the Young Scientists SupportProgram ; and (ii) review future changes to, or introduction of newcriteria, guidelines and procedures with the Bank for endorsementprior to their introduction and implementation (para. 3.2(b)).

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5.3 During negotiations the government confirmed that (para 3.27): (a)progress reports would be submitted semi-annually; (b) annual audits ofacceptable scope and quality would be carried out by independent auditorssatisfactory to the Bank; (c) annual audit reports for the preceding fiscal yearwould be made available to the Bank no later than by June 30th each year; and(d) a mid-term review of the project's progress would be carried out by the Bankand the Borrower by the November 30, 1993.

B. Conditions of Disbursement

5.4 Disbursements for goods under the adult training component of theproject will be conditional upon (para. 2.17): (a) the NTC budget having beenadopted for the borrower's fiscal year ending December 31, 1991; (b) operationalguidelines for regional training boards having been adopted and at least fourof these boards having been established and staffed; and (c) the proposedprograms and budgets of these regional training boards having been adopted forthe borrower's fiscal year ending December 31, 1991 (para. 2.17).

C. Recommendation

5.5 Subject to the above, the proposed operation provides a suitablebasis for loan of US$150 million to the Government of Hungary.

37 -

ANNEX I. TABLE 1. POPQLATIOQ BY SEX AND AGE GROUP(January L988)

AGE GROUP MALE FEMALE TOTAL

0-4 318,823 305,369 624,1925-9 378,915 360,083 738,998

10-14 446,976 423,092 870,06815-19 378, 6 357,375 736,321

20-24 338,591 318,730 657,32125-29 345,307 332,579 677,886

30-34 457,472 443,593 901,06535-39 410,319 407,204 817,523

40-44 351,449 354,923 706,37245-49 318,071 341,892 659,963

50-54 287,980 327,903 615,88355-59 292,574 340,302 632,876

60-64 265,412 331,577 596,98965-69 199,774 280,181 479,955

70-74 126,392 191,703 318,09575-79 118,370 199,559 317,929

80-84 55,202 109,406 164,60885-89 20,576 47,810 68,386

90- 5,115 14,815 19,930

Total 5,116,264 5,488,096 10,604,360

SSource : Central Statistical Office

- 38 -

ANNEX I. TABLE 2. COMPREHENSIVE FERTILITY INDICATORS OF HUNGARY.1880-1980

YEAR LIVE BIRTHS TOTAL AVERAGE REPRODUCTION AVERAGE NO. AVERAGE NO. OFFERTILITY (a) PARITY (al RATE OF CHILDREN CHILDREN BORN (c,

PER THOUSAND PER THOUSAND ----- ----- OF DECEASED ----------------POPULATION 15-49 YEAR GROSS NET MARRIED OF OF

MARRIEDOLD Wl1N W0MEN (bI MARRIED VCMEN

AGEDWOMEN 50-59

1880(d) 44.4 1701900(d) 39.7 154 5.32 4.37 2.59 1.45 3.621920 31.4 117 3.80 1.83 1.13 5.111940 20.0 70 2.89 1.19 0.97 4.311950 20.9 77.4 2.57 2.51 1.24 1.07 2.59 3.331954 23.0 88.3 2.97 2.50 1.43 1.311960 14.7 58.9 2.02 2.18 0.98 0.91 2.32 2.901962 12.9 52.5 1.80 2.15 0.87 0.81 2.29 2.801970 14.7 56.6 1.96 1.88 0.95 0.91 2.65 2.01 2.421973 15.0 58.2 1.95 1.86 0.94 0.91 2.51 2.00 2.391974 17.d 69.6 2.30 1.89 1.12 1.07 2.52 1.95 2.321975 18.4 72.8 2.38 1.87 1.16 1.11 2.47 1.94 2.301976 17.5 69.9 2.26 1.84 1.10 1.06 2.42 1.94 2.281977 16.7 67.3 2.17 1.84 1.06 1.02 2.42 1.94 2.261978 15.8 64.1 2.08 1.82 1.01 0.98 2.42 1.94 2.241979 15.0 61.5 2.02 1.81 0.99 0.96 2.39 1.94 2.231980 13.9 57.6 1.92 1.82 0.94 0.91 2.34 1.89 2.14

N 0 T E: [a] On basis of the yearly calendar live birth rate.(b] From a marriage duration of 20 years or longer.Cc) Population census data until 1973; data of the continuous registration of the populaticn for

1974-80.[d] In the territory of Hungary prior to 1920.

S0URCES: Valentina and Bodrova (eds) Working Women in Socialist Countries: A Fertility Connection (ILO,Geneva: 1985)

- 39 -

ANNEX I. TABLE 3. DISTRIBUTION OF ACTIVE EARNERS AS PER THEBRANCHES OF THE NATIONAL ECONOMY

BRANCH OF THE 1949 1960 1970 1980 1087NATIONAL ECONOW ---------- T H O U 8 A N D P E O P L E ------ P ERCENT

1. Industry 792.9 1328.6 1813.2 1724.6 1526.2 31.2

2. Building industry 91.1 289.1 370.0 413.0 341.5 7.0

3. Agriculture and 2195.5 1831.9 1216.9 940.1 942.7 19.3forastry

4. Transportation, 180.5 308.5 363.1 412.5 404.3 8.3post, te*1com.

5. Trade 214.8 297.7 394.7 495.6 514.2 10.5

6. Water management 4.4 10.8 59.1 76.6 79.2 1.6

7. Personal and *co- 144.4 117.5 137.8 199.3 228.9 4.7services /a

8. Health, social 152.7 268.8 382.4 540.7 610.8 12.5and cultural rarv.

9. Coamunal, administra- 308.2 306.8 382.4 540.7 610.8 12.5tive and other services

T 0 T A L 4084.9 4759.6 4988.7 5068.0 4885.2 100.0

N O T E:a/ Together with other material activities.

SOURCE: Ministry of Labor

- 40 -

ANNEX I. TABLE 4. EDUCATIONAL BACKGROUNDS OF THE LABOR FORCE IN HUNGARY

PRIMARY SCHOOL FINISHED

SECONDARY SECONDARY EDUCATIONAL

MAIN GROUPS OF TOTAL 6 - 7 8 PROFES- SCHOOL INSTITUTE

EDUCATION LESS THAN - - SIONAL OF HIGHEST

6 GRADES G R A P E S SCHOOL GRADE

1 70 P E R C E N T A G EPhysical occupationsSkilled laborers 100.0 3.8 21.7 39.0 27.4 7.9 0.2Semi-skilled laborers 100.0 16.1 38.5 41.0 1.0 2.5 0.1Unskilled laborers 100.0 23.5 43.4 30.8 1.2 1.0 0.1Helping fam. members ofthe working members ofagricultural co-oper. 100 0 21 4 52.7 25.4 0.3 0.2 0 0

SUBTOTAL 100.0 14.4 34.7 36.5 10.1 3 8 0 1

Intellect, occupations 100.0 0.6 5.0 27.5 1.6 45.1 20.2Self-employed and theirhelping fem. members 100.0 20.2 47.0 23.3 2.7 3.5 3.3

TOTAL 100.0 11.2 27.9 34.1 7.8 13.9 5.1

1980Physical occupationsSkilled laborers 100.0 0.9 7.0 31.4 45.3 15.1 0.3Semi-skilled laborers 100.0 8.1 24.1 55.4 6.4 5.8 0.2Unskilled laborers 100.0 17.3 30.9 45.0 4.9 1.8 0.1Helping fam. members ofthe working members ofagricultural co-oper. 100.0 17.2 50.0 31 0 1.1 0.7 0.0

SUBTOTAL 100.0 6 6 16.3 43,2 22.6 9.1 0.2

Intellect. occupations 100.0 0.2 1.5 18.0 4.0 49.7 26.6Self-employed and theirhelping fam. members 100.0 11.4 30.6 31.7 14.5 9.3 2.5

TOTAL 100.0 4.8 13.7 35.4 16.9 21.1 8.1

1 9 8 4Physical occupationsSkilled laborers 100.0 0.5 3.6 29.9 48.4 17.3 0.3Semi-skilled laborers 100.0 6.1 15.5 61.7 10.3 6.2 0.2Unskilled laborers 100 0 *2.8 20.8 55.6 8.6 2.1 0.1Helping fam. members ofthe working members ofagricultural co-oper. 100.0 8.- 33.2 53.7 2.0 2.7

SUBTOTAL 100.0 4.4 10 7 45.8 28.0 10.9 0 2

Intellect. occupations 100.0 0.1 0.5 13.1 4.8 51 1 30.4Self-employed and theirhelping fam. members 100.0 4 7 11.8 31.3 26.1 20.9 5.2

TOTAL 100.0 3 0 7.5 35.0 20.7 23.9 9.9

SOURCE: Ministry of Labor

41 -

ANNEX I. TABLE 5. MONTHLY BASIC WAGES. PER CAPITA LABOR COSTS TO EMPLOYERS.AND ACTUAL EARNINGS BY OCCUPATION

DENOMINATION AVERAGE AVERAGE INCCtE I AVERAGE INCOME IIBASIC SALARY (STANDARDIZED) 1/ (ACTUAL)

2/LEVEL RELATIVE LEVEL RELATIVE LEVEL RELATIVEHUF 3/ SIZE (I HUF 3/ SIZE (1) HUF 3/ SIZE (X)

Unskilled laborers 3238 100.0 4371 100 0 4711 100.0Semi-skilled laborers 3755 116.0 5273 120.6 5839 123.0Skilled laborers 4620 142.7 6490 148.5 7097 150.6All manual laborers 4151 128.3 5816 133.1 6370 135.4

Managenient clerks 5687 175.6 7081 162.0 7197 152.8Administrative clerks 4298 132.7 5116 117.0 5193 110.2

All clerks 5208 160.8 6403 146.5 6506 138.1Production managers 6155 190.1 8394 192.0 9316 197.7Mid-level managers in enterprises 8638 266.8 12389 283.4 12442 264.1Mid-level managers in cooperatives 7328 226.3 9853 225.4 9912 210.4All mid-level managers 8490 262.2 12102 276.9 12156 258.0

Top executives in enterprises 12993 395.1 20702 473.6 20756 440.6Top executives in cooperatives 10608 327.6 17110 391.4 17125 363.5All top executives 12346 381.3 19967 456.8 20013 424.8All clerks and mid-level managers 5733 177.1 7391 169.1 7676 162.9

N 0 T E S:1/ Labor costs to employers.2/ Actual earnings including various benefits, profit premia etc.3/ HUF- Hungarian forint.

SOURCE: Ministry of Labor

ANNEX I. TABLE 6. STAFF OF PUBLIC EMPLOYMENT SERVICESPER THOUSAND OF WORKING AGE POPULATION (15-64)

Country Employmeent Employment Total Incl.Offices Offices Plus Unemployment

Network and BenefitPrograimne AdministrationManagement

Sweden 1 1.4 1.4United Kingdom 0.9 1.3 1.3Germany 0.6 0.9 1.3Denmark 0.6 0.8 --

Norway 0.6 0.8 0.9Finland 0.6 0.8 --Australia 0.5 0.8 1.1Belgium -- 0.8 --Netherlands 0.4 0.5 1.4Canada 0.3 0.7 1.2Austria 0.3 0.5 0.7Switzerland 0.3 0.3 0.4France 0.2 0.5 0.9New Zealand 0.2 0.4 0.9Spain 0.2 -- --Portugal 0.2 0.3 0.3Ireland 0.1 0.4 1.2Greece -- 0.1 0.4Turkey -- 0.1 0.1Hungary 1/ 0.03 -- --

N 0 T E: 1/ Source: Ministry of Labor

SOURCE: Peter Scherer. A Review of National Labor Market Policies in OECD Countries.A paper presented at the World Bank Seminar on Economic Adjustment and Social Dimensions. 1990.

- 42 -

ANNEX I. TABLE 7. ECONOMIES IN TRSITION: STRUCTURAL ADJUSTMENT IN OECDCOUNTRIES (PARIS, 1989, OECD)

Growth and Labor market performanceAverago annual growth rates

GDP EMPLOYMENT LABOR FORCE UNEMPLOYMENT RATE

1973-83 1983-88 1973-83 1983-88 1973-83 1983-88 1973 1983 1988

United States 1.8 4.0 1.7 2.7 2.2 1.8 4.9 9,6 5.5Canada 3.0 4.5 2.1 2.9 2.8 2.0 5.5 11.9 7.8

Japan 3.6 4.5 0.9 1.0 1.0 0o9 1.3 2.7 2.5

France 2.3 2.2 0.1 -0.1 0.8 0.3 2.7 8.4 10.3Germany 1.6 2.6 -0.6 0.6 0.1 0.6 1.0 8.2 7.9rtaly 2.2 3.2 0.7 0.6 1.1 1.1 5.9 9.2 11.1United Kingdom 1.0 3.5 -0.5 1.7 0.4 1.1 2.1 11.2 8.5

Austria 2.4 2.0 0.1 0.5 0.4 0.5 0.9 3.7 3.7Belgium 1.8 2.1 -0.4 0.6 0.7 0. 2.3 12.9 10,5Denmark 1.5 2.1 0.1 1.6 1.1 1.2 1.0 10.4 8.5Finland 2.8 3.4 0.5 0.4 0.9 0.2 2.5 5.4 4.7Iraland 2.5 1.4 0.5 -0.7 1.5 -0.1 5.7 14.0 16.6Netherlands 1.9 2.3 -0.4 1.1 1.0 0.5 3.1 15.0 12.5

Norway 3.9 3.3 1.6 1.7 1.8 1.6 1.6 3.4 3.1Portugal 2.6 2.9 2.1 0.8 2.7 0.5 2.2 7.9 6.5Spain 1.9 3.6 -1.4 1.1 0.4 1.4 2.2 18.2 19.5Sweden 1.5 2.4 0.8 0.7 0.9 0.4 2.0 2.9 1.7Switzerland 0.3 2.7 -0.4 0.9 -0.3 0.9 0. 0.8 0.7

Australia 2.1 4.2 0.8 3.1 1.6 2.5 2.3 9.9 7.4New Zealand 0.9 1.8 1.1 0.8 1.6 0.8 0.2 5.4 5.3

Total OECD 2.1 4.2 0.7 1.6 1.3 1.2 3.5 8.9 7.4OECD Europe 1/ 1.8 4,2 0. 0.9 0.8 0.8 3.5 10.4 10.3Of which:Low unemployment countries a 2.1 2.8 0.4 0.8 0.6 0.7 1.3 3.1 2.6

High unemployment countries 3/ 1.7 2.8 -0.2 0.8 0.7 0.8 2.7 10.6 10.6Low unemployment countries 4/ 2.2 4.1 1.4 2.0 1.8 1.4 3.4 7.2 4.6

N 0 T E: Percentage changes (or rates) for groups f countries are the percentage changes (or the ratios) ofthe aggregate series for the group. GDP aggregates are expressed in US dollars at constant exchange

rates.

1/ Excluding Greece, Turkey, Yugoslavia.?/ Austria, Finland, Norway, Sweden, Switzerland3/ Germany, France, United Kingdom, Italy, Belgium, Denmark, Netherlands, Portugal, Spain4/ Countries Listed in (2) above plus United States, Japan and Canada

SOURCES: OECD, Economic Outlook, Historical Statistics, 1960-1987. Estimates for 1988 are from Outlook 44(December 1988).

- 43 -

ANNEX II. TABLE 1. ENROLJAENT AND TEACHING STAFF IN EDUCATION

1983/4 1984/5 1985/6 1986/7 1987/8 1988/9 1989/90

I. P R I M A R YNumber of Institutions 3,546 3,539 3,546 3,540 3,540 3,526 3,527

Enrollment 1,269,899 1,286,648 1,297,818 1,299,455 1,277,257 1,242,672 1,183,573

Growth 1.32X 0.87X 0.13X -1.71X -2.711 -4.76X

Teaching Staff 83,496 66,367 86,066 89,611 90,925 90,620 90,602

Growth 3,44X -0.352 4.12X 1.47S -0.342 -0.02X

Student-Teacher Ratio 15.21 14.90 15.08 14.50 14.05 13.71 13.06

II. S E C 0 N D O R Y11-1. Secondary SchoolsNumber of Institutions 545 553 561 587 608 645 675

Enrollment 225,308 232,342 236,104 236,881 239,768 248,337 273,511

Growth 3.12S 1.621 0.33S 1.221 3.57S 10.142

Teaching Staff 16,889 17,466 17,899 18,527 19,184 20,084 21,425

Growth 3.42S 2.48S 3.51S 3.55S 4.69X 6.68X

Student-Teacher Ratio 13.34 13.30 13.19 12.79 12.50 12.36 12.77

I1-2. Apprenticeship Schools L/Number of Institutions 269 270 274 278 284 294 299

Enrollment 174,810 178.044 176,380 175,228 177,191 186,796 201,702

Growth 1.852 -0.93S -0.65S 1.12S 5.42S 7.98X

Teaching Staff 11,090 11,397 11,505 11,591 11,651 11,745 12,044

Growth 2.77S 0.95S 0.751 0.52S 0.81S 2.55X

Student-Teacher Ratio 15.76 15.62 15.33 15.12 15.21 15.90 16.75

III. H I G B E RNumber of Institutions 58 58 58 54 54 58 57

Enrollment (regular students) 62,944 63,217 64,190 64,855 66,697 71,689 72,381

(evening students) 6,539 6,119 6,203 6,040 5,851 5,540 5,255

(correspondent students) 30,382 30,650 28,951 27,610 26,477 25,812 23,187

Evening and Correap. Sub-total 36,921 36,769 35,154 33,650 32,328 31,352 28,442

Total Students 99,865 99,986 99,344 98,505 99,025 103,041 100,823

Growth of regular students 0.42 1.52 1.01 2.8X 7.52 1.02

Growth of all students 0.12 -0.62 -0.81 0.52

Teaching Staff 14,452 14,545 14,850 15,111 15,302 16,242 16,319

Growth 0.62 2.12 1.82 1.32 6.1X 0.5X

Student-Teacher Ratio 4.36 4.35 4.32 4.29 4.36 4.41 4.44

Student-Teacher Ratio 2/ 5.06 5.04 4.98 4.91 4.94 4.95 4.92

N 0 T E S:

1/ Excludes typing, stenography, and health care training

2/ Using full time equivalent (FTE) figures. FTE is defined as: Regular Students + 1/2.5(Evening Students)+ 1/4(Correspondent Students)

SOURCE: Ministry of Education and Culture

- 44 -

ANNX II. TABLE 2. SUMMARY DATA ON SECONDARY EDUCATION INSTITUIONS

SECONDARY SCHOOLS SECONDARY-LEVEL SCHOOL (APPRENTICESHIP)

GRAMMAR & TECH 5-YEAR TYPING & TECH. HEALTH-SCHOOL GRAMMAR SEC. VOC. VOC. TECH- STENOGR. VOC. CARE COMBINEDYEAR SCHOOL SCHOOI. SCHOOL NICUM TOTAL TRAINING TRAINING TRAINING TOTAL TOTAL

No ot Schools1963/84 174 83 287 1 545 58 269 23 350 8951984! 85 175 84 293 1 553 58 270 25 353 9061985/86 179 81 300 1 561 58 274 24 356 9171986/87 186 82 318 1 587 57 278 24 359 9461987/88 190 85 332 1 608 56 284 25 365 9731988/89 195 86 363 1 645 58 294 24 376 1,0211989/90 204 89 381 1 675 63 299 29 391 1,066

No. of Tutors1983/84 7,409 n/a 9,480 n/a 16,889 242 11,090 403 11,735 28,6241984/85 7,709 n/a 9,757 n/a 17,466 250 11,397 399 12,046 29,5121985/86 7,923 n/a 9,976 n/a 17,899 236 11,505 385 12,126 30,0251986/87 8,286 n/a 10,241 n/a 18,527 253 11,591 383 12,227 30,7541987/88 8,646 n/a 10,538 n/a 19,184 258 11,651 404 12,313 31,4971988/89 9,103 n/a 10,981 n/a 20,084 288 11,745 434 12,467 32,5511989/90 9,656 n/a 11,769 n!a 21,425 303 12,044 504 12.851 34,276

No of Students1983/84 101,230 n/a 123,971 107 225,308 7,638 174,810 5,501 187.949 413,2571984/85 104,534 n/a 127,680 128 232,342 7,705 178,044 5,548 191,297 423,6391985/86 105,794 n/a 130,155 155 236,104 7,751 176,380 5,491 189.622 425,7261986/87 105,194 n/a 131,517 170 236.881 7,744 175,228 5,279 188,251 425,1321987/88 105,976 n/a 133,618 174 239,768 7,378 177,191 5,414 189,983 429,7511988.789 108,440 n/a 139,897 n/a 248,337 7,343 186,796 5,645 199,784 448,1211989/90 116,317 n/a 157,194 n/a 273,511 6,794 201,702 6,531 215,027 488,538

Student-Teacher Ratio1983/84 13.66 n/a 13.08 n/a 13.34 31.56 15.76 13.65 16.02 14.441984/85 13.56 n/a 13.09 n/a 13.30 30.82 15.62 13.90 15.88 14.351985/86 13.35 n/a 13.05 n/a 13.19 32.84 15.33 14.26 15.64 14.181986/87 12.70 n/a 12.84 n/a 12.79 30.61 15.12 13.78 15.40 13.821987/88 12.26 n/a 12.68 n/a 12.50 28.60 15.21 13.40 15.43 13.641988/89 11.91 n/a 12.74 n/a 12.36 25.50 15.90 13.01 16.03 13.771989/90 12.05 n/a 13.36 n/a 12.77 22.42 16.75 12.96 , _ 14.25

SOUJRCE Ministry of Education and Culture

- 4,5 -

ANNEX II. TABLE 3. SECONDARY LEVEL SCHOOLS APPRENTICE SCHOOLS 1

IJ88 89

A. Location (if Practical Trai4itj

NUMBER UF STUDENTS PERCENTAGE

SCHXL FLANT PLANT NON-GROUP TOTAL SCHOOL PLANT AT PLANT NON-YEARh: Gfi.AE .hAIN'NS TRAINING WORK AND OTHER TRAINING TRAINING WORK GROUP &

SHOPS SHOP PLACE TRAINING SHOPS SHOPS PLACE OTHER TOTAL

1'.861 39,842 10,424 9,120 77.247 23.1X 51 6X 13.5 i1.81 1001,, 6.7HD 29.l78 12,155 11,567 59.680 11.4X 48.9S 20.4S 19.4X 1001

... 3.043 11,235 13,542 22,049 49,869 6.1 22.5X 27.2X 44.2X 1001

. -- ;- 80,255 36,12 42 , i36 86,7Y6 14.8X 43.0 19.3X 22.9X 1001

8. Numbor of Students bv Sector and Grade

MAIN GfiOUPS OF THE ------------------------------ ----------________________NAT'OS ..A:. ECONOMY NJMBER OF STUDENTS TOTAL PERCENTAGE. OF STUDENTS TOTAL

BY YEAR/GRADE BY YEAR/GRADE

Industry 44,624 34,044 28,684 107,352 57.8X 57.0X 57.5X 57.52Construction Industry 8.697 6,577 5,717 20,991 11.32 11.02 11.5X 11.22Agriculture and Food Industry 6,948 5,039 4,299 16,286 9.0X 8.42 8.62 8.72Serving Industry 3,260 2,769 1,691 7,720 4.2X 4.62 3.42 4.12Trade and Catering 13,323 10,977 9,262 33,562 17.2X 18.42 18.6X 18.0XTransportation and Telecomm. 395 274 216 885 0.51 0.52 0.4S 0.51

Total 77,247 59,680 49,969 186,796 100.0% 100.02 100.0X 100.02

N 0 T E: I/ Excludes typing, stenography and health care training.

SOURCE Ministry of Education and Culture

- 46 -

ANNEX II. TABLE 4. ADULT VOCATIONAL TRAINING

Number cf Courses by Sector. 1985/86

QUALIFICA- PERCEN- OUT OF TOTALTION AND FURTHER TAGE (1)

NO VOCATICNAL LINE SEAI-SKILLED TRAINING TOTAL OF TOTAL BLUE-COLLAR WHITE COLLAR

NUMBER OF COURSES

1 Industry 1,434 2,294 3,728 24.00 3,077 6512. Construction 271 670 941 6.06 831 1103. Agriculture anf Fcrestry 178 327 5CS 3.25 346 1594 Water Management 28 13 41 0.26 27 145 Land-Survey 4 10 14 0.09 0 146. Transport 354 308 662 4.26 556 1067. Communication 199 113 312 2.01 166 1468. Coamerce, Catering 628 268 896 5.77 388 5089. Materials Transport,

Packaging Technology 706 86 792 5.10 791 110. Economics, Accountancy,

Administration 451 501 952 6.13 0 95211. Computer Sciences 197 757 954 6.14 92 86212. Law, Judiciary 350 1,544 1,894 12.19 663 1,23113. Education, Culture 352 1,432 1,794 11.55 7 1,77714. Health 178 613 791 5.09 55 73415. Others 165 1,051 1,256 8.09 991 265

TOTAL 5,495 9,987 15,532 100.00 7,990 7,530

SCURCES: Ministry of Culture and Education, Ministry of Labor

ANNEX II. TABLE 5. ADULT VOCATIONAL TRAINING

Completion by the Type of Education and Country, 1985/86

VOCATIONAL FURTHER ALL COURSES FROMCOUNTY, TOWN AND SEMI- CONTINUOUS TOTAL THE TOTAL

SKILLED TRAININGQUALIFICATION NUMBER X BLUE-COLLAR WHITE-COLLAR

NltBER OF THOSE COMPLETED COURSES

Budapest 62,682 121,219 184,101 46.30 74,898 109,203Baranya County 4,935 8,570 13,505 3.40 9,776 3,729Bacs-Kishun Count 1,236 7,046 8,282 2.08 2,618 5,664Bekes-County 4,877 6,647 11,524 2.90 8,175 3,349Borsod-Abauj-Zemplen County 10,2e7 25,466 35,753 8.99 18,817 16,936Csongrad-County 3,041 8,699 11,740 2.95 6,060 5,680Fejer County 3,216 9,601 12,817 3.22 6,467 6,350Gyor-Sopron County 4,514 9,972 14,486 3.64 8,195 6,291Hajdu-Bihar County 2,664 8,634 11,298 2.84 6,720 4.578Heves County 1,931 5,111 7,042 1.77 5.188 1 854Komarom County 6,282 16,233 22,515 5.66 7,731 14 784Nograd County 887 4,267 5,154 1.30 3,833 :,321Pest County 1,326 3,300 4,626 1.16 1,059 3,567Somogy County 1,997 4,577 6,574 1.65 3,903 2,671Szabolcs-Szstmar County 2,256 7,077 9,333 2.35 4,377 4,956Szolnok County 2,206 8,070 10,276 2.58 7,551 2,725Tolna County 846 4,613 5,459 1.37 2,587 2,872Vas County 3,214 4,163 7,377 1.86 5,236 2,141Veszprem County 3,012 7,272 10,284 2.59 7,905 2,379Zala County 1,668 3,808 5,476 1.38 3,372 2.104

Total 123,277 274,345 397,622 100.0 184,468 203,154

SOURCE: Ministry of Education and Culture. Ministry of Labor

- 47 -

ANNEX II. TABLE 6. RETRAINING SUPPORT BY SECTOR

January - June 1988

EooNoC sEo NUMBER OF TWUSE PARIICIPATIE IN RETRAINING RETRAINING SVPPTEMPPDYEES

NUMBER X FORINTS X

Industry 84 3669 51.2Z 19,233,233 51.9XConstruction Industry 6 242 3.4X 1.696,681 4.61Agriculture and 43 1616 22.5X 8,964,279 24.21Forestry

Transport, Postal Service 6 260 3.6X 2,125,845 5.7%and Communication

Commerce 14 1091 15.2X 4,603,888 12.4%Water Management 1 160 2.21 273,026 0.7XNon-material 3 130 1.8% 183,894 0.5Xaranches

TOTAL 157 7168 100.0X 37.080,846 100.0X

SOURCE: Ministry of Culture and Education. Ministry of Labor

- 43 -

ANNEX II. TABLE 7. DISTRIBUTION OF HIGHER EDUCATION INSTITUTION BY SIZE

NUMBER OF STUDENTS -300 301-500 501-1000 1001-2500 2500- TOTAL

AUTONcMUS !NSTITUTES 6 14 16 13 5 54X 112 26X 30X 242 24% 100S

INDEFENDENT FACULTIES 21 6 1 0 0 28X 75X 212 4% 0X 0X 1002

TOTAL 27 20 17 13 5 82X 33X 24% 21% 16X 62 1002

Source: Ministry of Education and Culture

ANNEX II. TABLE 8. ADMISSION, APPLICATION, AND ENROLLMENT IN HIGHER EDUCATION

1983/4 1984/5 1985/6 1986/7 1987/8 1988/9 1989/90

Total 1st Year Students 17,821 18,319 18,792 18.812 18,984 20.486 20,204Domestic Students 1/. - - - - 17.536 18,043 -

Applications 2/. - - 43,884 46.084 -Applic/Admissions 3/. - - - - 250.25% 255.41X -

As 2 of ThoseGraduating from 37.12 36.92 36.22 33.72 30.3X 35.72 36.22Secondary Schools

Students Enrolled as X ofAge group Population 9.82 9.92 9.92 9.62 9.62 9.72 10.0218-22

NOTES:

1/ Excludes foreign students (757 in 1987) and repeaters (663 in 1987).2/ Each student filed only one application in 1987/8, while multiple

applications were permitted in 1988/9.3/ Application/Admission ratios are different from MOE published data

since the latter are based on planned admission.

SOURCE: Ministry of Education and Culture

- 49 -

ANNEX II. TABLE 9. STUDENT ENROLLMENT. ADMISSION AND APPLICATIONS BY FACULTY

N U M B E R O F S T U D E N T S1987x88

EVENING 1/REGULAR COURSE CORRESP. TOTAL RATIO ADMISSION APPLC. RATIO

FACULTY OF SCIENCES 4108 301 688 5097 5.1S 948 1928 203SFACULTY OF LETTERS 3819 424 1609 5852 5.91 737 3129 4251FACULTY OF LAW 2695 472 1194 4361 4.4X 505 1696 3361UNIV OF ECONOMICS 2743 937 1033 4713 4.81 560 1481 264SCOLLEGE OF ECONOMICS 3271 1409 1925 6605 6.7X 1070 3987 373%

ECONC*IICS TOTAL: 6014 2346 2958 11318 11.42 1630 5468 335STECHNICAL UNIV. 8401 105 1724 10230 10,32 1855 2996 1621TECHNICAL COLLEGE 6655 406 3185 10246 10.31 2140 4096 1911

TECHNICAL TOTAL: 15056 511 4909 20476 20.72 3995 7092 1781MEDICAL UNIV 7505 0 0 7505 7.68 1210 3434 2841MEDICAL COLLEGE 1105 0 549 1654 1.72 420 925 220X

MEDICAL TOTAL: 8610 0 549 9159 9.22 1630 4359 2672AGRICULTURAL UNIV. 4243 0 1069 5312 5.42 895 2117 2372AGRICULTURAL COLLEGE 2337 0 866 3203 3.2t 600 1427 238X

AGRICULTURAL TOTAL: 6580 0 1935 8515 8.62 1495 3544 237XTEACHER TRAINING 10667 821 5570 17058 17.2% 2752 8515 3092TEACHER AND NURSERY NURSE 6686 615 5639 12940 13.12 Z255 5181 230SEDUCATION OF ARTISTS 1212 80 85 1377 1.4X 261 2595 9942OTHERS 1250 281 1341 2872 2.9X 325 1250 3852

TOTAL 66697 5851 26477 99025 100.01 16533 44757 271t

N 0 T E S:1/ Admission target figures are those determined by MOE, and are not necessarily equal to

actual admission figures.2/ Regular students/total full-time teaching staff.

SOURCE: Ministry of Education and Culture

- 50 -

ANNEX II. TABLE 10. STUDENT ENROLLNENT BY FIELD IN HICfGER EDUCATION 1/

1983/4 1984/, 1985/6 1986/7 1987/8 1988/9 1989/90

UNIVE'RSITIES 33,906 33,839 33,892 34,253 35.680 37,040 38.144S of Total 53.9% 55.42 54.6S 54.61 53.5S 51.71 54.6XLaw 2,508 2,568 2,633 2.655 2,695 2,776 2,874

4.01 4.2Z 4.2Z 4.2X 4.01 3.92 4.1%Numanities 3,256 3,318 3,557 3,596 3,819 4,097 4,369

5.2% 5.4S 5.7S 5.7X 5.71 5.7S 6.31Natural Sciences 3,653 3,687 3,671 3,848 4,108 4,228 4,485

5.8% 6.0% 5.9% 6.1% 6.2S 5.92 8.4SEconomics 2,600 2,549 2,585 2,619 2,743 2,939 3,066

4.1% 4.2% 4.21 4.21 4.11 4.11 4.4%Teachers Training 1,540 1,502 1,490 1,479 1,617 1,684 1,696

2.4% 2.51 2.4% 2.42 2.42 2.3S 2.4%Engineering 8,442 8,377 8,176 8,187 8,401 8,668 8,770

13.41 13.7% 13.2% 13.1Z 12.68 12.1 12.62Agriculture & Vat. 4,228 4,251 4,358 4,347 4,792 4,812 5,132

6.7% 7.0% 7.0 6.9% 7.2Z 6.92 7.42Medicine 7,679 7,587 7,422 7,522 7,505 7,736 7.752

12.21 12.4% 12.02 12.02 11.32 10.68 11.1l

COLLEGE 29,038 27,276 28,152 28,479 28,818 32,270 31,65746.1% 44.6Z 45.4% 45.42 43.22 45.02 45.4%

Engineering 6,760 6,643 6,655 6,671 6,655 6,569 6,50310.72 10.9% 10.72 10.62 10.O% 9.22 0.3Z

Agriculture 1,950 1,864 1,854 2,190 1,889 1.855 1,7953.1% 3.02 3.0% 3.5X 2.81 2.62 2.61

Medicine 1,036 1,020 1,044 1,b'0 1,105 1,168 1,2351.62 1.72 1.7Z 1.6). 1.7S 1.61 1.8S

Economics 2,117 2,102 2,146 2,123 2,205 2.352 2,5803.41 3.42 3.52 3.42 3.3X 3.3% 3.71

Others 17,175 17.749 18,599 18,588 19,169 22,678 22,12427.3% 29.0% 30.0% 29.68 28.7Z 31.6S 31.7%

Total 62,944 61,115 62,044 62,732 66,697 71,689 69,801tO00.0% 100.0% 100.02 100.01 96.7% o/ 96.7Z a/ 100.0%

N 0 T E S:I/ Regular students only.2/ Some discrepancies were fount in total figures

SOURCE: Ministry of Education and Culture

ANNEX II. TABLE 11. GROWTH OF STUDENT ENROLLMENT BY FIELD

1984/5 1985/6 1986/7 1987/8 1988/9 1989/90

UNIVERSITIES -0.2S 0.2% 1.1; 4.22 3.82 3.02Law 2.4% 2.5X 0.82 1.5% 3.02 3.51Humanities 1.91 7.2% 1.12 6.22 7.3X 6.6%Natural Sciences 0.9% -0.4% 4.8% 6.8S 2.92 6.1XEconomics -2.0% 1.4% 1.3% 4.72 7.12 4.3%Teaching Training -2,5X -O0.81 -0.71 9.31 4.12 0.7ZEngineering -0.8% -2.4Z 0.11 2.6S 3.2X 1.2ZAgriculture & Vet. 0.5% 2.5% -0.3% 10.21 2.5% 4.55Medicine -1.2% -2.2X 1.3% -0.2S 3,1% 0.2%

COLLEGES -6.1% 3.21 1.22 1.2% 12.0 -1.95Engineering -1.71 0.2X 0.22 -0.2S -1.3% -1.02Agriculture -4.4S -0.5X 18.12 -13.7% -1.8S -3.2SMedicine -1.5% 2.4S -1.3Z 7.3Z 5.72 5.7%Economics -0.7% 2.12 -1.l1 3.9% 6.7% 9.7X

TOTAL. -2.92 1.5% 1.12 6.3% 7.5S -2.6%

SOURCE: Ministry of Education and Culture

- 51 -

ANNEX II. TABLE 12. TOTAL NUMBER OF STAFF IN HIGHER EDUCATION i

1988 18Planned Actual Planned

Higher Education Total _/ 40,027 37,774 40,368

Universities 28,723 26,905 29,038Colleges 11.213 10,780 11,241

Postgraduate Training 56 81 56

Postgraduate Specialist Training 35 28 35

N O T E S1/ Includes all non-teaching staff.2/ Includes all higher *ducation institutions.

SOURCE Financial Data Processing Institute

ANNEX II. TABLE 13. NUMBER OF TEACHING STAFF IN HIGHER EDUCATION (1987-88)

PROFESSOR ASST. FIRST DEMDN- LANGUAGE SPORTS COLLEGE TOTAL PART-TIME TOTALSPROF. ASST. STRATORS INSTRUCT. INSTRUCT. INSTRUCT FULL-TIME TEACHERS

FACULTY OF SCIENCES 117 253 412 98 36 0 0 916 36 952FACULTY OF LETTERS 103 237 382 176 114 37 12 1,061 127 1,188FACULTY OF LAW 42 58 88 54 14 4 0 260 86 346UNIV OF ECONOMICS 45 136 196 102 9 11 0 499 82 581COLLEGES OF ECONOMICS 41 104 203 94 0 15 5 462 51 513ECONOMICS 86 240 399 196 9 26 5 961 133 1,094TECHNICAL UNIVERSITIES 179 429 1,097 254 174 36 a 2,177 256 2,433TECHNICAL COLLEGES 124 287 575 134 95 37 28 1,280 81 1,361TECHNICAL 303 716 1,672 388 269 73 36 3,457 337 3,794,MEDICAL UNIVERSITIES 233 263 765 1.432 45 18 8 2,764 83 2 847MEDICAL COLLEGES 9 11 50 14 14 4 5 107 20 127MEDICAL 242 274 815 1,446 59 22 13 2,871 103 2,974AGRIC UNIVERSITIES 157 187 395 118 58 22 8 945 37 982AGRICULTURAL COLLEGES 59 94 186 54 36 21 14 464 16 480AGRICULTURAL 216 281 581 172 94 43 27 1,409 53 1,462TEACHER TRAINING 99 293 599 323 69 26 13 1,422 121 1,543TEACHER AND NURSERY NURSE 89 197 423 142 10 2 1 864 29 893EDUCATION OR ARTISTS 72 114 129 50 16 5 3 389 251 640OTHERS 41 64 128 38 44 15 37 367 49 416

TOTAL 1,410 2,727 5,628 3.083 734 253 142 13,977 1,325 15,302

SOURCE: Ministry of Education and Culture

- 52 -

ANNEX II. TABLE 14, COMPARATIVE DATA ON EDUCATION(1986 data unless otherwise specified)

TOTAL EXPEND TOTAL EXPEND CAPITAL EXP. AS CURRENT EXP. AS UNIT RECURRENTIN EDUCATION IN HIGHER EDUC. 2 OF TOTAL HE 2 OF TOTAL HE IN HEAS 2 OF GDP AS t OF GDP EXPENDITURE EXPENDITURE (US$/STUDENT)

AUSTRIA 6.061 1.156 10.92Z 89.081 5,317GERMANY F R. 4.471 0.96X 12.03X 87.971 4,766FINLAND 5.721 1.051 5.301 94.705 5,295FRANCE 5.842 0.7112/ 3.532Z/ 96.47S2/ 3,728HUNGARY 4.982 0.65X 14.96X 85.04X 2,010JAPAN 5.11X NA NA NA 8,518NETHERLANDS 6.802 1,74X1/ 10.09X}/ 89.91I2/ 4,8591/SWEDEN 7.38X NA NA NA 6,130

NOTE: 1/ 1985 data._/ 1984 data.

SOURCE: UNESCO, Finistry of Education and Culture, mung.ry.

ANNEX II. TABLE 14.1 GROSS ENROLLMENT RATIOSTERTIARY EDUCATION(1987 OR LATEST)I/

OECD COUNTRIES3/ MF M F

AUSTRALIA 28.8 28.8 28.8 ('86)AUSTRIA 29.4 31.3 27.4BELGIUM 32,7 33.8 63.5CANADA 58.2 53.1 63.5DENMARK 29.6 29.1 30,2r NLAND 37.6 36.7 38.5FRANCE 30.9 29,7 32.0GERMANY F.R. 30.1 34.2 25.6 ('86)GREECE 26.2 25.9 26.5 ('85)ICELAND 21.2 22.6 23.4 ('86)IRELAND 24.2 27.0 21.4 ('85)ITALY 24.3 25.4 23.2 ('86)JAPAN 28.3 35.0 21.4NETHERLANDS 31,3 35.7 26.8 ('86)NEW ZEALAND 36.4 37.1 35.6NORWAY 35.3 34.1 36.7PORTUGAL 12.0 11.0 13.1 ('85)SPAIN 30.0 29.6 30.3 ('86)SWEDEN 31.2 28.8 33.7SWITZERLAND 23.7 31.7 15.4UNITED KINGDOM 22.3 NA NAUNITED STATES 59.6 55.5 63.7 ('86)

Simple Average: 31.1

EASTERN EUROPEAN COUNTRIES.

BULGARIA 22.6 19.6 25.8CZECHOSLOVAXIA 16.2 18.2 14,0HUNGARYZ/ 15.2 13.8 16.7POLAND 17.8 15.3 20.4ROCOANIA 9.8 NA NAYUGOSLAVIA 18.6 19.1 18.0

Simple average: 16.7

NOTES: I/ As 2 of the age group population for 20-24._/ Includes evening and correspondence students.3/ All OECD countries except Luxembourg and Turkey.

S(XIRCE: UNeSCO Statistical Yearbook 1989

- 53 -

ANNEX II. TABLE 15. EXPENDITURE OF EDUCATIONAL INSTITUTIONS 4/

(FORINT MILLION; CURRENT PRICES)

1985 1986 1987 1988 1989 1990ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL PLAN

Education Total 49,365 54,264 59,855 - -

Recurrent expenditure 43,177 45,595 49,547 63,043 86,890Of which tinanced by state budget 1/ 37,188 39,189 42,441 54,325 72,763

Investment 6,188 8,669 10,306 - -

As X of GDP 4.78X 4.98X 4.88X - - -

Real Grrwth - 3.65X 2.07S -

Prima.y Education Total 20,942 22,178 24,100 28,973 -

Recurrent Expenditure 18,225 19,069 20,537 25,324 -

Of which financed by state budget 1/ 16,089 16,905 18,222 22,782 35.025Investment 2,717 3.109 3,563 3,649 32,393As 2 of GDP 2.03X 2.04X 1.97X 2.05X - -

Real Growth - -0.08X 0.51S -0.52X

Secondary Education Total 10,877 13,050 14,427 17,238 -

Recurrent Expenditure 9,180 9,684 10,496 13,499 19,504

Of which financed by state budget 1/ 8,368 8.882 9,588 12,443 18.239

Investment 1,697 3,366 3,931 3,739 -

As X of GDP 1.05 1.20X 1.186 1.22X - -

Real Growth - 12.961 2.56X 0.332 - -

Higher Education 6,445 7,025 7,988 12,057 14,542 17,050

Recurrent Expenditure 5,566 5,974 6,562 10,468 12,464 14,550

Of which financed by central budget 1/ 4,973 5,238 5,735 9,854 11,805 14,080

Investment 879 1,051 1,426 1,589 2,078 2,500

Of which financed by central budget _/ 650 800 1,100 1,250 1,700 2,100

As 2 of GDP 0.622 0.652 0.65X 0.85X 0.862 0.852

As X of Total Public Spending 3/ 1.022 0.982 1.01S 1.36X 1.432 1.562

Recurrent Exp per Reg. Student (thousand ft) 87 92 98 146 172 -

(USS) 1,726 2,010 2,095 2,896 2,832 -

Real Growth in Recurrent Expenditure - 1.242 1.232 29.302 -2.802 0.05XReal Growth in State subsidy for rec. exp. - -0.642 0.912 39.272 -2.202 2.22X

Real Growth in Investment - 13.222 28.292 5.322 12.69X 5.002

Real Growth in State Subsidy for Investment - 16.542 30.01X 7.412 17.202 7.822

Enrollment in HE (regular students) 64,190 64,855 66,697 71,689 72,381 -

(evening students) 6.203 6,040 5,851 5,540 5,255(correspondent students) 28,951 27,610 26,447 25,812 23,187

Subtotal of evening and correspondent students 35,154 33,650 32,298 31,352 28,442Grand total of all students enrolled 99,344 98,505 98,995 103,041 100,823

N 0 T E S:

1/ Budget from Ministry of Finance2/ Budget from National Planning Office3/ Total public spending includes all expenditures by public institutions, social security, interest and

production and price subsidy payments.4/ All figures correspond to expenditures strictly related to higher education activities. Since

many higher education institutions undertake activities outside higher education, figures shown here are

smaller than those given for total expenditures by higher education institutions.

SOURCE: Ministry of Finance, National Planning Office, Ministry of Education

- 54 -

ANNEX II. TABLE 16. BUDGETARY EXPENDITURE PER STUDENT (Ft.)

1985 1986 1987

Kindergartens 15,919 17,049 18,706Primary Schoois 13,055 13,542 14,629Secondary EducationGrammar Schools 17,339 18,189 20,357Vocational Secondary 24,576 25,597 27,686Apprentice 21,448 22,609 23,909Higher Education 78,013 82,447 89,447

N 0 T E: Calculated per student of day section.

SOURCE: Central Statistical Office

- 55 -

ANN II. TABLE 17. EXPENDI-TURES FOR UNIVERSITIES AND COLLEGES UNDER MOE('000 Ft.)

UNIVERSITIES COLLEGES

18 989 198 1989EXPENDITURE ACTUAL X OF ACTUAL S OF ACTUAL X OF ACTUAL S OF

TOTAL EXPEND. TOTAL EXPEND TOTAL EXPEND. TOTAL EXPEND.

Inventory purchases 414,866 6.052 526,455 5.071 233,103 8.03 287,992 7.78XWage fund 2,175,505 31.74S 2,720.355 26.181 1,073.662 37.001 1,206,379 32.582Material-type expenditurel/ 521,712 7.61X 712,474 6.861 148,217 5.11S 166,300 4.492Wage-type expenditure2/ 1,002,995 14.641 1,264,415 12.172 511,912 17.642 596,156 16.102Maintenance and utilities3/ 783,734 11.44X 932,568 8.981 347,231 11.97X 339,722 9.17XSocial security and other

payments to government 339,957 4.96X 1,085,300 10.45X 131,733 4.542 470.083 12.69XMajor repair (reconstruction) 723,493 10.56X 713,845 6.871 95,425 3.292 135,022 3.652Income tax 16,079 0.232 13,053 0.132 9,426 0.322 8,827 0.242Repayment of credits for

recurrent exp. (bonds) 3,045 0.042 92,682 0.892 0 0.002 0 0.00XFunds transferred for recurrent

expenses 64,689 0.942 667,688 6.432 11,994 0.41X 21,805 0,592Total Recurrent Expenditure 6,046,075 88.22X 8,728,835 84.022 2,562,730 88.312 3,232,286 87.282National Investment 315,201 4,602 557,441 5.372 94,064 3.242 128,863 3.482Management Investment 28,134 0.412 56,658 0.552 606 0.022 1,224 0.032Initial purchase of consumable

items 1,135 0.022 1,746 0.022 6,949 0.24X 722 0.022Non-investment development

expenditure 15,844 0.232 34,358 0.332 9,584 0.332 47,277 1.282Funds transferred for

development6/ 66,001 0.962 19,119 0.18X 11,568 0.402 9,252 0.251Total Development Expenditure 426,315 6.222 669,322 6.442 122,771 4.232 187,338 5.06SVAT on purchased products

and services4/ 336,062 4.90X 501,658 4.832 108,460 3.742 135,969 3.672VAT payment5/ 42,610 0.62Z 81,512 0.782 16,682 0.572 23,710 0.642Compensation, temporary

funds transfer 2,108 0.03 408,215 3.932 91,292 3.152 123,935 3.352

TOTAL EXPENDITURE 6,853,170 100.002 10,389,542 100.002 2,901,935 100.002 3,703,238 100.002

REAL GL1ITU 23.762 4.182

NOTES:I/ Includes travel, books, stationary orders, cleaning and communication expenses2/ Includes representation, student support (scholarships, food subsidy and social support).3/ Includes rent, water heating expenses, service fees paid out, and other maintenance services.4/ Includes all VAT payments for services and products purchased by the institutions

(e.g. for rent paid under 3).5/ Includes VAT payment for services provided by the institutions.6/ Funds transferred to enterprises supervised by councils.

SOURCg: Ministry of Education and Culture

- 56 -

ANNEX III, TABLE 1. NUMBER OF EMPLOYEES IN RESEARCH AND DEVELOPMENT(Full Time Eguivalent)

1984 1985 1986 1987

Total No. of Employees 49,360 48,745 49,148 47,227Scientists and Engineers 22,518 22,479 22,974 22,284

SOURCE: Scientific Research and Development in 1987, CentralStatistical Office. Budapest 1989

ANNEX III. TABLE 2. DISTRIBUTION OF SCIENTISTS AND ENGINEERSENGAGED IN R+D IN 1989

ACTUAL NO. OFSCIENTISTS FULL TIME EQUIV. S OF& ENGINEERS TOTAL

HAS Research Inst. 3,277 2,773 12.9XNon HAS Research Inst. 4,110 3,262 15.22Higher Edu. Research Units 13,991 5,251 24.5XEnterprise Research Units 11,157 8,504 39.72Other Research Units 2,733 1,637 7.6%

35,268 21,427 100.0%

SOURCE: Hungarian Academy of Sciences

- 57 -

ANNEX III. TABLE 3. PERCENTACE DISTRIBUTION OF SCIENTIFIC RESEARCHERSBY AGE (1972-19801

YEAR/AGE -29 30-39 40-49 50-59 60- TOTAL

Year1972 22.5 35.4 29.0 10.0 3.1 1001977 21.2 38.1 25.1 13.5 2.8 1001982 16.0 37.6 25.2 18.7 2.7 1001987 12.8 34.4 30.4 18.8 2.9 100

Location (1987)R+D Institutes 12.6 33.9 30.4 19.8 2.7 100Universities 9.9 33.7 31.0 19.7 3.5 100R+D Units in Enterprises 15.9 35.6 29.5 17.2 2.3 100Others 12.4 33.4 31.8 18.4 2.9 100

SOURCE: Hungarian Academy of Sciences

PERCENTAGE OF SCIcNTISTSIN GIVE4 AGE GRJPS

4,

40-

*1-

30-

0-29 30-39 40-49 50-59 60-

1972 1977 = 19i2 CM 19a7

- 58 -

ANNEX III. TABLE 4. ALLOCATION OF THE HUNGARIAN RESEARCH FUND(OTKA) BY SUPERVISING MINISTRY OF R+DINSTITUTES (Approved Subsidies 1986-88)(Million Ft)

1986 1986 1987 1987 1988 1988

Ministry of Industry 16 4.95X 24 4.161 6 1.51S

Ministry of Agriculture 22 6.81S 54 9.361 47 11.84S

Ministry of Architecture 7 2.17S 9 1.56S 3 0.761

Ministry of Education 51 15.79S 151 26.17S 121 30.48X

Ministry of Health 28 8.671 68 11.791 48 12.091

Hungarian Academy of Science 179 55.42X 244 42.29S 170 42.82X

Central Geological Institute 7 2.171 8 1.39X 2 0.501

Ministry of Env. & Water Management 3 0.932 6 1.04X 0.00X

Others 10 3.10X 13 2.25X 0.00X

Total 323 100.00X 577 100.002 397 1/ 100.00X

N 0 T E S:I/ The figure given in the source is 404.

SOURCE: Scientific Research and Development; Central Statistical Office 1989

ANNEX III. TABLE 5. NUMBER OF SCIENTISTSPER 10.000 INHABITANTSFOR SELECTED COUNTRIES (1982)

German Dam.Rep. 72.4 ('81)Soviet Union 53.0Bulgaria 47.0Japan 39.4Czechoslovakia 31.1United States * 30.3 *Poland 21.8FPR.Germany 20.8Hungary 20.5Finland 19.7 ('81)The Netherlands 19,7 ('81)Norway 18.8Italy 9.1Ireland 8.9

SOURCE: Research and development in Hungary, 1989* Incomplete coverage of data.

- 59 -

ANNEX III. TABLE 6. PER CAPITA R+D EXPENDITURE FORSELECTED COUNTRIES

COUNTRIES R+D/CAPITA

USA $379Japan $257F.R.Germany $272France $223U.K. $218Finland $134Italy $94Ireland $45Spain $31Portugal** $17Hungary $50

SOURCE: Research and Development in Hungary, 1989(Original Source. OECD)

ANNEX III. TABLE 7. EXPENDITURE FOR R+DIN SELECTED COUNTRIES

COUNTRY YEAR AS I OF GNP

Hungary 1981 2.51984 2.41987 2.7 *

United States 1980 2.41983 2.61986 2.8 *

Japan 1981 2.41984 2.61986 2.8 8

F.R.Germany 1981 2.51983 2.51985 2.7 *

France 1979 1,81986 2.3 *

United Kingdom 1986 2.3 a

Israel 1983 3.7 *

Korea, Rep. of 1986 1.8 *

Norway 1980 1.3 *1984 1.61987 1.9 *

Finland 1981 1.21985 1.51987 1.8 a

Austria 1981 1.21985 1 3

Greece 1986 0 3 *

Pertugal 1986 0.5 *

SOURCE: Scientific Research and Development in 1987,Central Statistical Bureau, 989

*SOURCE Unesco Statistical Yearbook 1939

- 60 -

ANNEX III. TABLE 8 SUBMITTED AND APPROVED APPLICA'rIONS OF OTKA

NfUM"ER OF SUMBER NUMBER OF N2hERAPPLIC, IONS APPROVED APPLICATIONS APPROVED

198o 1986 1987-88 I/ 1987-88

Total Nuzber 1926.0 761.0 1314.0 503.0

Total Subsidy (Billion Ft) 8 1 2.1 3.3 0.4

of which:Running Costs 6.1 1.6 3.3 0.4

Investment 0.4Infrastructure Development 2.0 I/ 0.1

N 0 T E S:I/ Time period of subsidy: 1988-91. Further 0.Z billion Ft. was approved for

eatablishment of Instrument Centers between 1988-91,2/ Investment and Infrastructure Development together.

SOURCE: Scientific Research and Development in 1987, Central Statistical Office,Budapest 1989.

ANNEX. III. TABLE 9. SIZE DISTRIBUTION OF HAS-RUN RESEARCHINSTITUTES IN NATURAL SCIENCES

No. of Scientists <25 25-50 '0-100 100-500 >500

& EngineersHumber of Institutes 3 8 6 3 1

SOURCE: Hungarian Academy of Science 1988.

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ANNEX IVPage 1 of 7

HUNGARYHuman Resources Project

Employment and Training Component

Project Implementation ScheduleImprove Employment Information and Services

Objectives and Sub-Objectives Actions Target Dates

(a) Provide labor 1. Strengthen the FY1992-94

statistics needed to Uniform Population Data

support operation of Collection Systema market economv (quarterly household(Central Statistics survey) to improve

Office). monitoring ofunemployment.

2. Broaden the FY1992-93establishmentregistration data base,including public/private-large/smallenterprises.

3. Increase availability FY1992-94of current wage data byrevising/ improvinghousehold and/orestablishment surveys.

4. Update the Consumer 'Y1992-93Price Index and relatedl7ving standardinformation data bases.

5. Revise and modernize FY1992-94occupational &educational/trainingclassification systemsand establish linkagesbetween them.

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ANNEX IVPage 2 of 7

6. Develop, through FY1992-93analysis of census data& implementation ofestablishment surveys, asector/occupationalmatrix system to defineoccupational structureof major sectors.

(b) Develop short and 1. Refine short-term FY1992-94medium term tech- (6-12) month laborniques for labor market analyses andmarket analyses to train staff in allsupport planning and regional labor officescareer counseling in in techniques.enterprises, laboroffices andeducational/traininginstitutions (MOL).

2. Initiate a National FY1992Occupational InformationCoordinating Committee,composed of datadevelopers and users, todevelop policies fordata development anduse.

3. Identify and quantify FY1992-93factors affectingoccupationalreplacement, growth andloss in differentsectors (includingproductivity measuresand technologicalchanges).

4. Develop an FY1992-93interactive system tocombine medium term(1-5 year) currentoccupational employment(a6) with changefactors (b3).

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ANNEX IVPage 3 of 7

5. Define major avenues FY1992-93of occupational supply,identify qualitative andquantitative factorsaffecting supply.

6. Develop interactive FY1992-93system to analyze mediumterm labor market demand(b4) and supply (b5)trends, trainenterprises and traininginstitutions to use andinterpret information.

(c) Refine labor 1. Develop labor market FY1992components of social modeling techniques forpolicies to improve restructuring; regional,efficient functioning economic and infrastruc-of the labor market tural development.(MOL).

2. Improve cost- FY1992-93effective utilization ofthe Employment Fund byintroducing regionalevaluation, planning andbudgeting techniques.

(d) Assist displaced 1. Expand occupational & FY1992-93workers and youth educational information,find employment by aptitude & interestimproving employment assessment techniquesservices (MOL). including developing an

automated careerinformation system.

2. Develop, with a FY1992-93consortium of HigherEducation Institutions,short courses andcollege, graduate/post-

graduate programs forlabor office and schoolcounselors.

3. Refine and expand job FY1992-93search materials forlabor office clients andprovide training tolabor office staff.

- 64 -

4. Refine and expand FY1991-93industrial adjustmentservices for mass layoffsituations.

ANNEX IVPage 4 of 7

HUNGARYHuman Resources Project

Employment and Training ComponentProject Implementation Schedule

Improve Adult Training

Objectives and Sub-Objectives Actions Target Dates

(a) Develop national 1. Develop NTC FY1991-93initiatives and management and planningservices to support systems to: (i) evaluateadult training and national and regionalretraining. adult training

priorities, (ii) definestaff, facility, programand administrative normsand policies for fundingRLDCs programs.

2. Define, in coopera- FY1992tion with VocationalTraining Institute andInstitute for PublicEducation proceduresfor: (a) job analysis,(b) skill testing and(c) development ofmodular trainingmaterials for adultbasis and vocationaltraining programs.

3. Define and implement, FY1992-93with NTC staff or bysubcontracting, specialstudies and supportsystems (i.e.; evalua-tion management,accreditationprocedures) to determinecost effectiveness ofadult training andemployment programs.

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AN-NEX IVPage 5 of 7

(b) Provide improved 1. Develop and implement FY1991-92adult employment and administrative systemstraining services in and plan for RLDC/RATCs.up to 10 regions.

2. Develop and implement FY1991-93modular basic educationand foreign languageprograms.

3. Develop and implement FY1991-93customized quick-startvocational trainingprocedures and programs.

4. Develop and implement FY1991-94core modular vocationaltraining programs.

5. Develop and implement FY1991-92small business technicalassistance programs.

6. Develop and implement FY191-93counseling and placementprograms.

(c) Initiate short 1. Develop criteria forterm vocational identification andtraining in isolated selection mobileareas with high training programs.unemployment1991-92). 2. Provide mobile

training programs/equipment in to all 8RATCs.

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ANNF-X IVPage 6 of 7

HUNGARYHuman Resources Project

Employment and Training ComponentProject Implementation Schedule

Improve Youth Education and Training

Objectives and Sub-Objectives Actions Target Dates

(a) Develop a revised 1. Visit and review Augustnational model for comprehensive secondary 1991.secondary vocational school programs inschools to promote several countries andincreased develop a revised modeloccupational and for Hungarian Secondarycareer choice. Vocational Schools

addressing: (i) basiceducation, (ii)vocational training,(iii) bilingual trainingand (iv) careercounseling.

2. Develop procurement Jan.Mar.unit (PCU) to serve 1991employment and trainingcomponents of project(5 staff).

3. Define, with the AugustVocational Training 1991.Institute, Institute forPublic Education andoccupational advisorycommittees, proceduresto be used to developand implement new and/orrevised: (i) basiceducation and (ii)vocational programs thatwill teach skills andknowledge common togroups of relatedoccupations.

- 67 -

ANNEX IVPage 7 of 7

(b) Develop revised 1. Develop revised FY1992-93curriculwus with vocational curricula,representatives from including software andVocational Training hardware requirementsSchool Centers, the for (15) vocationalInstitute for specialties (e.g.Vocational Training metalworks, electricityand occupational electronics, chemical &advisory committees. environmental building/

construction,agriculture, sales &marketing, businessoffice, food service &hospitality, health &personal service,mechanical power,performing arts, graphicarts & printing).

2. Develop revised and FY1992-93new basic educationcurriculum, includingsoftware and hardwarerequirements for seven(7) basic educationcurriculums includingcommunications,informatic, socialstudies, naturalscience, mathematics,languages andtechnology).

(c) Implement new 1. Obtain and install FY1992-94curriculums in software & equipment andproject train staff to use newcenters/schools. basic education

curriculums in all(approximately 60)project schools in 20centers.

- 69 -

ANNEX 5Page 1 of 12

ANNEX 5

CRITERIA AND PROCEDURES FOR THE CATCHING-UP-WIT-EUROPE FUND (CEF)

The following criteria and procedures for the CEF have beenprepared by the Hungarian working teams for higher education under thedirection of the Secretary of State in the Ministry of Education. These wereagreed with the Bank misslons and the call for applications (Sections I andII) was issued in August 1990. These will be further refined and agreed uponduring negotiations for the next two rounds of competition.

I. CALL FOR APPLICATION

for Universities and Colleges, published by the Fund for

"CATCHING UP WITH HIGHER EDUCATION IN EUROPE"

The Hungarian Government is negotiating with the World Bank on aloan program for a "Human Resources Project". Among others, this loan wouldestablish the financial basis of a program that would contribute to thedevelopment of higher education in Hungary.

If there will be an agreement between the Hungarian Government andthe World Bank on the loan conditions, the credit contract could be signedduring the first half of 1991. Accordingly, the first part of the loan couldbe used in the second half of 1991.

It is envisaged that the loan to be provided for the developmentof higher education and the support to be given by the Republic of Hungarywill lead to the establishment by the Council of Ministers of a Fund for"Catching Up With Higher Education in Europe". The Committee of the Fund,presided by the Minister of Culture and Public Education, will allocate theresources of the Fund through open competition.

Based on negotiations with the World Bank, the main objectives ofthe loan and of the Fund, financed by this loan, are:

- to increase the efficiency of higher education;

- to encourage the regional coordination and cooperation betweenneighboring universities and colleges;

- to strengthen the cooperation between higher level educational andresearch institutions, and the entities utilizing their output;

- to increase the number of students in higher education;

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ANNEX 5Page 2 of 12

- to promote tho establishment of an integrated system of highereducation including college and university education andpostgraduate research;

- the possible extension of the training form 3+2, keeping in viewthe equivalence of Hungarian degrees to the European ones; and

- to establish career oriented and consulting services in collegesand universities, that would help manage the problems of studentsselected according to the admission system.

Since a longer time is needed for the elaboration andqualification of the applications, experts from the Ministry of Culture andPublic Education and from the World Bank have come to an agreement on drawingup a conditional application.

The application is conditional in the sense that it precedes theagreement between the World Bank and the Republic of Hungary, thus the actualestablishment of the Fund. In case the agreement and the establishment of theFund were delayed or cancelled, there would be no way to carry out theapplications. Simultaneously, the application is conditional also in thesense that one of the fundamental conditions for the acceptance by the WorldBank of the loan contract is that the applications presented and selected bythe committee should be in accordance with the objectives of the granting ofthe loan. The winning of the competition requires genuine developmentactivities from the given institution(s). The World Bank plans to supervisethese activities regularly. At the same time, the implementation of theapplications would enable the institution to lay the foundations of adevelopment with substantial potential advantage, provided that a reallycompetitive system will be established in the area of higher education.

II. CRITERIA FOR APPLICATION

Applications can be submitted by cclleges and universities, orjointly by colleges and universities, universities and research institutes, oruniversities and economic organizations.

Applications with complex development plans are welcome. Prioritywill be given to applications submitted (a) collectively, by institutions ofthe same region that formulate common goals and (b) in order to create theconditions for and to implement target oriented programs supported byadditional foreign sources (e.g. TEMPUS).

The applications have to consider the implementation of thefollowing objectives:

- 71 -

ANNEX 5Page 3 of 12

a) The genuine modernization of education and research taking intoaccount the economic necessities of structural adjustment,creating conditions for modernizing the direction and managementof institutions, promoting developments that increase the numberof students in the respective educational areas;

b) The improvement of cooperation between higher education andresearch institutions, in order to raise the level and efficiencyof education and research, and to utilize the achievements ofresearch;

C) The promotion of the integration between university and collegeeducation, on the one hand, and research, on the other hand,contribution to the establishment of universities with wide-rangetraining opportunities.

Considering the above objectives, financial resources (fijst ofall, in convertible currency) can be obtained in the following areas:

- Small-and large-scale investments, large-scale repairs;

- Purchase of machines, instruments, equipments;

- Purchase of furniture, installations, devices;

- Acquisition of "goods and operations" etc.;

- Consultants and other intellectual services;

- Intellectual property;

- Scholarships, research missions; and

- Invitation of guest professors, etc.

Financing of the above goals is according to the rules of theWorld Bank. (See the attached materials "Guidelines to purchases financed byloans provided by the World Bank and credits granted by the IDA" and

- 72 -

ANNE.X 5Page 4 of 12

"Guidelines to the use of consultants employed by the beneficiaries of WorldBank loans and by the organization entitled by the World Bank to implement aproject").

Attention is called to the fact that the implementation of theaccepted tasks will not be financed by direct transfer oi resources to theapplicants, but by reimbursing, through a central bank account to be opened bythe World Bank, of the bills of purchases and services aiming at the implemen-tation of the application goals. Complying with the rules and regulations ofthe competition, as determined in the attached guidelines, is the basiccondition of reimbursing the bills.

Operational expenses, arising from the implementation of theapplication, should be primarily financed by internal reserves, own incomesand/or by coordinated resources. Consequently, the demand for additionalstate support is subject to special considerations.

The detailed conceptual and technical requirements of theapplication are included in the appendix.

The Committee of the Fund decides about the support to beprovided. The president of the Committee is the Minister of Culture andPublic Education.

The Committee of the Fund signs a contract with the beneficiaries.This contract lays down the objectives, the procedures and regulationsconcerning the utilization of resources, as determined by the Committee andthe World Bank, and other conditions for support. The contract may impose inobligation of --partial--refunding of the resources provided.

Even in case of a positive response, the applicants should nottake any obligations, sign preliminary contracts and order goods and servicesin advance, until they have signed a contract, on the conditions of theapproved applications, with the Fund.

The Deadline of Submitting the Applications is: October 1. 1990

The applications should be submitted to the Secretariat of theFUND FOR CATCHING UP WITH HIGHER EDUCATION IN EUROPE, in three copies, both inHungarian and in English (Address: Ministry of Culture and Public Education.)

The Committee of the Fund will inform the applicants by February15, 1991, whether their applications have been approved or rejected.

The Committee of the Fund will respond to every applicant and sendthem some of the approved applications that can serve as a pattern, and r-nprovide important information for future competitions.

- 73 -

Page 5 of 12

Representatives of the institutions, whose application has beenapproved, will participate in a seminar in February 1991. Here, experts willoutline the regulations and procedures determined by the World Bank.

For information, concerning questions about the application,please, write to the address of:

Imre VegvariManager of Program office Ts-4/2

1066 BudapestDessewffy u. 9

and

Dr. Istvan PolonyiDeputy Director of DepartmentMinistry of Cilture and Public

Educatior.1884 Budapest, P.O. Box 1

- 74 -

ANNEX Page 6 of 12

tII. Sample Application and Selection CriteriaCatching-up-with-Europe Fund

Attached is a draft of the application form. In some sectionsindicative responses are shown in brackets, based on a hypothetical request byan institution for support of training for its administrative staff. Theseresponses are included only for guidance.

The criteria by which applications for funding will be evaluatedcould include the following:

(a) Support some or all of the following policy objectives for highereducation:

i improvement of financing and management;ii improved coordination and consolidation between

neighboring institutions;iii integration between college and university

education and research;iv improvement of links between higher education

institutions, research institutes and the usersof research findings;

v increased admissions to higher education;and

vi improved teaching and new courses in areasrelevant to restructuring, e.g. management,engineering, and environment etc.

(b) The internal consistency of the application, i.e. do itscomponents fit together as a coordinated conception, are there anyloose ends or extraneous elements?

(c) Feasibility of the application in relation to the existingresource endowment (staff, equipment, etc.) of theapplicant/applicants.

(d) Relevance of the proposed activity to regional development

(e) Impact of the proposed activity on employment:

i increased employability of beneficiaries;ii direct job creation; andiii displacement of existing jobs.

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ANNE 5Page 7 of 12

HUNGARY

HIGHER EDUCATION REFORM PROGRAM

SAMPLE APPLICATION FOR FINANCIAL SUPPORT FOR A SUB-PROJECT

From: The University/College of the Names of co-applicants or collaboratinginstitutions if any.

To: Catching up with Europe Fund (CEF), Ministry ofEducation, Budapest.

Subject: Request for support, amounting to forintsfor the purpose of

Section A. Basic Data of the Applying Institution:

(i) Enrollments by Faculty and Degree Program:

First Degree: t- - -- Year -----------------

Facutty/Department/Degree Program 1987 1988 1989 1990

Post Graduate Degrees:

__ _ _ _ _ _ _ _ _ _ _ _ ___ . I

__________________________________ - I~~~~~

______________________________________ -- I~~

_________________

- 76 -

ANNEX 5Page 8 of 12

(ii) Teaching and Non Teaching Staff of the Applying Institution:

Institutional Staff by |Level of Position | 1987 1988 1989 1990

I: Teaching Staff:

II: Non-Teaching Staff:

(iii) Financial Situation During |----- Year ---------------the Past Four Years |

(Forints '000)) 1987 1988 1989 1990

State SubsidyRecurrent BudgetInvestment Budget

Other Sources & amounts of Income:(e.g. non-profit research, lprofit-oriented research, |fees)

(iv) Supplementary information related to the current application.(e.g. available equipment, number of staf.- in the relevant field and theirbac.'ground).

- 77 -

ANNEX 5Page 9 of 12

Section B. Description of Problem

Describe the problem the applicant (or applicants) intends to address.e.g. lack of trained staff in university/college administration, inadequacy ofexisting programs to equip students with right skills for employment,inefficient use of facilities.

Section C. Proposed Solution

Describe the proposed solution, and indicate changes (if any) expected in,inter alia, enrollments, staff-student contacts, relations with otherinstitutions, and revenues/expenditures.

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ANNEX 5Page 10 of 12

Section D. Detail.ed Description of the Request for Financial Assistance

Describe in detail the proposed activities for which financial assistance issought.[EXAMPLE: As a £irst phase of its program to improve financing and management,the University/College plans to: (a) hire an external consultant for 6 monthsto help prepare a five year development plan; (b) send 3 senior staff overseasfor training in university administration; and (c) organize administrativestaff seminars for about --- junior level staff with the assistance of -

Section E. Estimated Costs and Proposed Financing

[EXAMPLE: Costs of the proposed sub-project are estimated as follows:

Project Item Man Unit Totalmonths Cost Cost

For. Mill.

Consultant in planning xxxx yyyyy zzzzzzTraining abroad aaa bbb ccccOrganization of Staff seminars ddd eeeee fffffPublications & reports. ggggg

Totals: jjjjjj

Financing for the above sub-project (costing jjjjjj million Forints) isexpected to be required as .ollows: 30X in 1991, 50X in 1992 and 20X in 1993.Participants iL.r the courses have been identified and search for appropriateconsultants is in progress. We understand, that if our application isaccepted by the Government, financial assistance agaiuist the aboveexpenditures will be periodically forthcoming on a 1001 basis from theAdministrator of the CEF, or his appointed financial intermediary againstappropriate proofs of expenditures. As stipulated by the Hungarian Ministry ofFinance, 10 of the amount received under this request will have to bereimbursed from the University/College income following completion of thisactivity.]

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ANMEX 5Page 11 of 12

Section F: Procurement Methodology'/.

[ If the estimated size of a proposed construction contract is in excessof US$1.0 million equivalent and that of equipment, vessels, materials andfurniture contracts in excess of US$0.5 million, these bids will be invitedunder the appropriate International Competitive Bidding procedures2 /. Wefurther understand, that if the size of such contracts exceeds US$5.0 millioneach, contract award will be subject to prior review by the World Bank iffinanced by them. Bids for equipment, furniture and materials contracts,estimated to cost less than US$0.5 million each, will be invited under localcompetitive procurement procedures in accordance with the applicableGovernment Procurement Regulations. Books, films, software and periodicalswill be procured after negotiations with publishers for discount and inaccordance with international laws/conventions regarding intellectualproperties. Education, Fellowships and Training contracts will be awardedunder the appropriate government rules. Consultancy contracts will be awardedin accordance with the rules of the World Bank as outlined in the booklet"Guidelines for the Use of Consultants by World Bank Borrowers and by theWorld Bank as Executing Agency". Research contracts will be awarded on thebasis of competitive proposals, adjudicated by agreed panels and in accordancewith procedures stipulated in the Loan Agreement between the World Bank andthe Government, dated ----. The financing of any other expenditures, notlisted above will be submitted to the World Bank through CEF for priorclearance.]

I/ All expenditures under the World Bank project must follow thestipulativLub %,-- this paragraph, but many of its stipulations will not beapplicable to e."h individual application for funding.

I/ Those of the World Bank or the Government, depending on which agencywill finance the contract. We understand that the procurement rules of theWorld Bank are contained in the Booklet "Guidelines for Procurement under IBRDLoans and IDA Credits: (May 1985).

- 80 -

ANNEX 5Page 12 of 12

Section G: Monitoring of Progress.

It is understood, that if this application for financial assistance is

accepted, we will send semi-annual progress reports to the CEF or any other

government agency assigned to monitor progress of the CEF. These progress

reports will include both physical and financial progress reports in such

detail as may reasonably be requested by the monitoring agency.]

Signed

199

Approved.

199

- 81 -

ANNEX 6Page 1 of 4

ANNEX 6

CRITERIA AND PROCEDURES FOR YOUNG SCIENTIST SUPPORT PROGRAM OF OTKA

The following criteria and procedures have been prepared by the HAS andwill be discussed for further refinements and agreement during negotiations.

I. THE ASSUMED BASIC CHARACTERISTICS OF THE SEPARATE OTKARESEARCH FUND FOR JUNIOR SCIENTISTS (F) AND OF THE

COMPETITION SYSTEM

If a separate support of junior scientists were accepted even inthe long run (i.e. not only for the three-year period of the World Bankloan), the institutionally separated funds for OTKA-Research Fund for JuniorScientists (FKA) within the OTKA budget would account for 10 percent of thewhole OTKA (amounting to a minimum of 600 to 800 million forints, at 1990prices) for the period 1991-1995.

The present competition is the first among the two or threecompecitions to be invited in this period, which are overlapping in time andthus may go on beyond 1995 too.

Under the present conditicns, only this, first competitionincludes World Bank sources, but even so, it must be a fundamental principlethat the repayment should not burden the above mentioned fund (lOX of OTKA).However, it is practicable to include the coverage of refunding in the OTKAbudget additionally rather than in the respective budget of agencies ororganizations supervising the grantees.

Major differences between the present and the OTKA thematiccompecition 1/3:

(a) Time span: second half of 1991 through 1993;

(b) Age limit: 35 years of age;

(c) A different system of criteria;

(d) Decision-maker: the newly established College of FKA resulting ina separate property of fixed assets and in a constrained tender;and

(e) the institutional linkage of the applicants to their research unitwill be looser, and this will involve a lesser demand onguarantees on the part of the institutions.

- 82 -

ANNEX6Page 2 of 4

Since the above differences should be clearly marked in theapplication forms and the accompanying instructions, as well as in themethodology of evaluation and in the documentation of the related contracts,it is advisable to elaborate them through adapting the documentations of theOTKA thematic competition I/3.

II. CALL FOR APPLICATIONS

Grants from the "Research Fund for Junior Scientists" (FKA),raised within the Hungarian Research Fund (OTKA), for the period 1991 through1993.

The OTKA Committee invites junior researchers to submit proposalsfor grants for promising and high-quality basic research topics that fit wellinto the international development of science and are aimed to attain newscientific knowledge and to explore new scientific methods and procedures.

For the purposes of this competition, as element 3 of project 5"Development of the background of scientific research and the training ofresearchers" under the World Bank Loan Program "Human Resources for TechnologyDevelopment", a total of 240 million forints (at 1990 prices) is availablefrom the World Bank (loan) and budgetary sources half-and-half. Applicationsmay be made by individuals under 35 years of age (young scientist or juniorresearchers) as well as by research teams or groups composed of suchindividuals. Applications for grants may also be submitted for researchprograms to be carried out in international cooperation.

According to the fundamental principles of OTKA, priority is givento proposals for basically novel and perspective research ventures. However,considering the age of applicants and the early stage of their scientificcareer, the criteria of evaluation focus on the content elements of theresearch proposal and on the expectable future outcome of the given researchrather than on the past records and performance of the applicants. Priorityis also given to university students and to participants in postgraduatetraining courses who are directly involved in the research and also to theapparent collaboration between university researchers and the staff members ofthe Academy's research institutes.

Applications may be made for any period between July 1, 1991 andDecember 31, 1993, which may include research costs (including the expenses ofusing infrastructure that forms the property of other institutions) and thecoverage of the acquisition of minor instruments and other research equipmentswhich do not qualify as fixed assets. (Researchers of other age-groups andresearchers' collectives, as well as investments aimed explicitly atdeveloping the instrumentation may be given support within the framework ofthe normal thematic or infrastructure-oriented competitions of OTKA.)

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ANNEX 6Page 3 of 4

(a) Applications should be submitted in four copies to the OTKAOffice;

(b) Deadline for submission: January 31, 1991; and

(c) Applications received after this deadline and those not meetingthe formal requirements will be left out of consideration.

The OTKA Committee will invite referees, as well as theprofessionally competent scientific committees of the Hungarian Academy ofSciences to review and rank the applications. Decisions will be made by theCollege of the OTKA Research Fund for Junior Scientists. Information ondecisions will be sent to applicants in June 1991.

The financial support of the approved proposals may start inJune 1991.

The applicant may ask for the opinion of a foreign expert - inaddition to the Hungarian reviewers - about the research proposals. In suchcase, the applicant should submit the research proposal in a foreign languagechosen at his/her discretion.

Presidentof the OKTA Committee

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ANNEX 6Page 4 of 4

III. THE PLANNED COMPOSITION OF THE COLLEGE TO MAKEDECISIONS ON RESEARCH PROPOSALS SUBMITTED TO THEOTKA RESEARCH FUND FOR JUNIOR SCIENTISTS (FKA)

1. One outstanding representative, under 40 years of age, from eachof the following five branches of science: natural, engineering,agricultural, medical, and social sciences (their designation ought to be leftto the consideration of the scientific sections of the Hungarian Academy ofSciences)

5 persons

2. One representative of the agency engaged in granting scientificdegrees (i.e. the would-be "legal successor" of what now is the ScientificDegree Granting Committee).

1 person

3. One representative designated from among the members of the OTKACommittee.

1 person

4. One representative of the universities (a person of the rank. ofpro-rector commissioned by the Conference of Rectors).

1 person

5. One person representing the student body of universities(delegated by "Council", elected in democratic manner, who is to represent therelevant age-groups).

,1 personTOTAL 9 persons

6. The College with elect its chairman from among its members inconsent with the Chairman of the OTKA Committee. Decisions are to be taken bymajority vote.

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ANNE 7Page 1 of 8

ANNEX 7

CRITERIA AND PROCEDURES FOR THE SCIENTIFIC INSTRUMENTATION CENTERS

The following set of criteria and procedures were developed by theHAS and would be refined and agreed at negotiations.

I. Background

For the purposes of the competition, "Development of the backgroundof scientific res-earch and the training of researchers" under the World Bank Loan

for "The Human Resources Project", applications may be submitted for the period1991 through 1993.

Version A:

Grant applications may be submitted for the setting up or extension ofdisciplinary instrument centers.

Version B:

Grant application may be made for:

- the establishment or further development or extension of instrumentcenters, both regional and disciplinary;

- the acquisition of special major research instruments (above thevalue of 1 million forints); and

- the support of research projects based on the use of instrumentcenters.

Tasks of the Instrument Centers

Serving as an efficient basis for the instrument infrastructure of

scientific research, the centers are to do - or promote - complex measurement

services in the given region of the country or for scientific and higher

educational institutions falling within their disciplinary competence, or for

economic (commercial) organizations.

- 86 -

AMkEX 7Page 2 of 8

The centers are to act as independent legal entities and are expectedto become self-supporting after one year of existence. Belonging to the sphereof activities of the center are: a) measurement techniques and the improvementof such methods; b) elaboration of new methods and techniques; and c) offeringoccasional repair and testing or standardizing services.

Through its highly qualified experts, the center should be alsoengaged in training activities necessary to make the users acquainted with theproper use of up-to-date, more sophisticated instruments.

The center is also bound to participate in nation-wide researchendeavours, and within this, it should be able to cooperate with other regions.

II. Criteria

Preconditions for Rarticipation in the competition for establishing instrumentscenters:

1) The applying institution(s) should have a staff with highqualifications in the given subject (field(s);

2) The applying institute(s) is (are) expected to have achieved - bothnationally or internationally - outstanding results in introducing,developing and applying the measurement techniques of the givenfield;

3) The center should already possess at least part of those small ormedium category modern instruments and equipments which are necessaryto the operation of that particular instrument it wishes to obtain;

4) Applications may not make claim to support for building investmentsor demands on public utilities;

5) The clientele of the center should be large enough and - fromscientific and/or business aspects - significant enough to ensurethe appropriate and necessary use of instruments;

6) Among the applying institutions there should be a preliminaryagreement on the economic, legal and other conditions of operationbefore submitting their applications;

7) Priority is given to applying institutions which are able to obtainother (e.g. company) support in addition to the OTKA grant and totheir own resources; and

8) In case of joint applications made by several institutions, theinstitution that would act as gestor should be specified.

8~ ~ ~~~~fE 7- 87 -~~~~~~~~~

Page 3 of 8

A22lications should contain:

1) The applying institution(s) should have a staff with qualificationsin the given subject field(s);

2) A comprehensive description of the results the applyinginstitution(s) and center(s) have achieved in the domesticintroduction, improvement and application of the measurementtechniques of the given field; the list of relevant publications ofmajor importance; the statement of their ventures in internationalcooperation, the names of those Hungarian institutions that areexpected to make demand on the center's (extended) services:

i. professionally exact specification; andii. the present and prospective main fields of application

(possibly with examples).

3) Specification of the applying institute's available instruments whichthe institute could then make available for use within the frameworkof the center. (Attachment 1);

4) Detailed description, specification and prices of instruments - basicunits, complementary units, appliances, etc. - to be purchased underthe grant program. (Attachment 2);

5) A statement of whether or not the required instrument or techniqueis already available anywhere in Hungary;

6) Description of placement and technical supply conditions (rooms,area, air-conditioning, energy supply, etc.) which are necessary toor are already available for the center's operation;

7) Ideas concerning the maintenance and servicing of the center'sinstruments, and their expected foreign currency demand;

8) The amounts of national and foreign currencies necessary to coverthe expected annual material and parts requirement of the center'soperation. (Comprehensive data as in Attachment 3);

9) Ideas of the applying institution(s) about the order of using thecenter to be set up under the grant applied for.

10) THe list of applications for the development of an existing center,only points 1), 2), 3), 5), 6), 8), and 10).

^ 88 7

Page 4 of 8

Version B

In case of applications for the acquisition of special majorinstruments, only those included in the preceding paragraph apply.

To applications for the support of research projects based on theuse of instrument centers, those included in the OTKA Competition (Third thematicOTKA competition) published in November 9, 1989 of Akademiai Kozlogn (OfficialGazette of the Academy). The application should state which type of service ofa particular instrument center is needed to the successful execution of theproject.

Applications will be evaluated and reviewed - with experts involved -by the Vice-Presidential College for the animate and inanimate natural science.

Information on the decisions will be given to the applicants in June1991.

The financial support of the approved proposals may start inJuly 1991.

Budapest, November 15, 1990.

Chairmanof the OTKA Committee

- 8° -

A 7Page 5 of 8AtCachment 1

Natme of the Conte,SOat of the Center

AvUilable tnstruimnts and equipments

(List of the most tmporttnt *quipments to be made ivel[able (or use by the Center)(To question 4 of the eppUcatton form)

Serlil Specification, typt *nd The equipment'snumber addittonal *qutpment 0r Manutfcturir prosent

eutevsions (firm and country) ptlce gturostieo cost "feUe nemlvalOE(intstiution,) ftc4q&uF,:1[on (Mr1ntx) In freoinc ILm tnen

fortnits) currsnc, forinti

.1 ~~~~~~~~~~~~~~~~~~I.,,n

TOTAL:

%Notes concerning the servicesbleness of the instruments, equipasimnte

- 8g -

ANNEX 7Page 5 of 8Attachment 1

N`me of the Contor

Soat of the Conter

Av,elabte Instruments and equipment#

(Ltt of the moat tmportant quipments to be made available for use by the Center)(To qusetton 4 or the eppbicttiJn form)

Serial Specification. type end The .quipment'snumber additional equipmenT or Manufactuer prosent year f gross value cosftvalue not value NOTE

5

extersions (firtl end country) place a tcqulilon (ralllon ios e ' lmhIls'n(Institution) f~~~~orintel currencv formicl)

Ic (ist (ri'llion tn rmillion l il________________ Ins_ icut__ on_____r_n__s___ Irorinis fo in s

ThTAL

KNote concerning the serviceablenees of the instrumenue, equipmsente

- 91 -

6MMNK 7Page 7 of 8Attachment 3

Nsme of the Center: ....Seat of the Center:.....

Comprehensive data to the competftion for regional and disciplinary

centers in the ftelds of research and development

1. Number of institutions se-viced by the Center ........................................................ institutions

2. Total demand on investment: ............................................................... million forints

of which in foreign currency .billion forints

3. Offered to the establishment of the Center:

a) total of own and external investment sources: ..................................................... nmillion forintsb' gross value of machines, instruments: ............................................................. million forintsc) gross value of other fixed asets: .million forints

4. The Cen.er's annual operational costs: .million forintsof which

a) wages .million forintsb) other personal expeditures .million forintsc) other (overhead, material expenditures. etc) .million forints

5. Offered to the operation of the Center:

a) coverage of operationas cots: .million forints/yenrb) planned coverage from returns from charges for services .million forints/yenr

6. The Center's foreign currency demand for materials and parts .million forints/year

- 92 -

ANNEX 7Page 8 of 8Attachment 4

III. Recommended Field for the Establishment of Regional andInterdisciplinary Instrument Centers

- Researches in experimental physics aimed to promote interdisciplinaryapplications;

- Researches in material science;

- Research and adaptation of up-to-date measurement techniques aimedto explore the mechanical characteristics of buildings, mechanical(engineering) structures and technologies;

- Researches in chemical structures;

- Researches in cellular and molecular biology;

- Researches connected with the introduction of chemical processes("chemicalization") in agriculture;

- Physiological and animal genetical researches connected withforaging;

- Researches in monoclonal anti-materials;

- Immune-toxicological researches in the fields of medical andagricultural sciences;

- Researches in natural resources; and

- Researches to explore the new means and methods of informationprocessing and transfer.

93 - ANNEX 8Page I of 10

HU"GARY

HLk4 RESOIJRCE DEVELOPMENT PROJECT TA

ESTIMATED QUANTITIES AND COSTS ..... . ......28-Feb-91 ....... ....... ... *-- - ..... - - - ..... L ocal Foreign Total Technical

10:10 Type Unit ---- Distribution of Quantitles --- Total Esc. Eac. Esc, AssIstane

of of .. t- o.......................... ...f Costs Costs Costs Package

Agency Objective Irput Input 1991 1992 1993 1994 1995 1996 Input USS 000 UsS '000 USS '000 N4rber

..................... ~~~~~~~~~~~~~.. ..... , ...... .. ..... ......... ............. . asi n cu m gr aseI IMPROVE STATISTICS, ANALYSES AND FORECAST

- -San St

Central A:1 Fellowship m/month 3 1 4 36 36 1

Stat- Household ConsulIant m/month 1

istical Survey Equipment X spread 30X 50X 20X 100% 1,162 463 1,625

Office Staff nm/month 8 8 a 8 8 40 27 27

A:2 Fellowship m/month 2 2 18 18 1

Developnt. of Consultant m/month 1 1 6 12 18 1

Registration Equipment X spread 50X 50S 100X 46 145 190

Staff n/month 9 3 12 8 8

A:3 Fellowship m/month 6 6 54 54 1

Occupational Consultant m/month 1 1 6 12 18 1

Wage Equipment X spread 100X 100X 187 97 284

Surway. Staff m/month 20 20 10 10 10 70 47 47

A:4 Fellowship m/month 3 1 4 36 36 1

Cnsiumer Price Consultant m/month

Index: Equipment X spread 100X 100S 28 28

Staff n/month 10 10 7 7

A:5 FelLowship m/month 1 1 2 19 19 1

Development of Consultant m/month 2 2 12 26 37 1

occupational Equipment X spread 100X 100X 6 2 8

Classification: Staff m/month 3 3 2 2

A:6 Feltowship m/month 2 1 3 27 27 1

Matrix Consultant m/month 0.5 0.5 1 6 13 18 IEquipment X spread 75X 25X 100X 17 17

Staff r/month 3 3 6 4 4

-94- ANNEX 8Page 2 of 10

IIMGARYHUA4A RES0URCE DEVELOPMENT PROJECT IA

ESTIMATED QUANTITIES AND COSTS ..... .... - ......28tFeb.91 -.- -- -- -- -- - -. . . .. - -- Local Foreign Total Technic

10:10 Type unit ---- Distribution of Quantities -- Total Etc. Ese. Esc. Assist,of of . . .Qty of Costs Costs Costs Packa'

Agency Objective Input Input 1991 1992 1993 1994 1995 1996 Irput uS, 000 USS 000 uss coo uumbe..... .. ... . ....... ....... ... ... . .. ... . .. ... .. . .. . amass= 5*84no 5a18g- *Bass

MOL: B(i) Feltowship mrnonthLabor Short Term Consult nt n/month 1 1 6 12 18 IndiviForce Projections Equipment X spread 100S 100t 46 46Anal- Staff inmonth 120 240 240 240 240 1.080 738 78yses

8:Cti) Feltowship n/monthoccupational Consultant m/month 1 1 6 12 18Council Equipment X spread 100X 1002

Staff m/month

B:tiii) Fellowship m/month 2 3 5 46 46Occupational Consultant m/monthDemand Equipment 2 spread 100X 100X 246 29 275

Staff m/month 30 48 48 48 48 222 151 151

B:(iv) Fellowship m/month 2 2 18 18occupationaL Consuttant m/month 4 4 22 49 72Analysis Equipment X spread

Staff mJmonth 20 24 24 24 24 116 79 79

B:tv) Fellowship m/monthOccupational Consultant m/month 1 1 6 13 19Supply Equipnent 2 spread

Staff m/month

B:(vi) Fellowship m/month 1 1 9 9Trend Data/ Consultant m/month 2 1 3 17 37 54Training Equipment % spread

Staff m/month

MOL: C:ti) Feltowship mn/month 2 2 4 36 36Social Modetling ConsuLtant m/month 2 2 11 25 36Policies Equipment 2 spread 502 50S 100X 75 57 132of Labor Staff m/month 60 25 25 50 32 32

C:tii) Fellowship m/month 3 2 4 9 84 t4Eaplotoent Fund Consultant m/month 2 3 1 6 35 76 111

Equipment X spread 502 502 1002 43 43Staff m/month 360 360 360 1,080 732 732

C:0(ii) Fellowship m/month 3 3 1 7 64 64Special Studie: Consultant m/month 4 1 1 6 34 75 109

Equipment 2 spread 50S 50S 1002 114 11 125Staff m/month 12 24 24 60 40 40

95- ANNEX 8Page 3 of 10

HUIGARYNUhAN RES0UCE DEVELOPMENT PROJECT TA

ESTIMATED QUANTITIES AND COSTS 28-Feb91 ----- ------- - ----- -- ----- ----- ---- ----- - - Local Foreign Total Technicai

10:10 Type Unit ---- Distribution of Quantities --- Total Esc. Esc. Ese. Assistancof of.t -. -- -- ---- -- -- .Qty of Costs Costs Costs Package

Agency Objective I'nut Irput 1991 199" 1993 1994 1995 1996 Input USS '000 USS '000 USS '000 Nuvter....................... ....... ....... ... ..... ..... ..... ..... ..... ..... ..... mason3 usages -333* 3****-

MOL: D:(i) Fellowthip r/month 4 4 36 36 3Enploym Occupational Consultant m/month 2 2 4 23 50 73 3Servc. Information Equipment X spread 50X 5O 100X 1,090 236 1,326Workers Staff o/month 150 150 100 100 500 342 342

D:(ii) Fellowship m/month 10 11 10 31 2U8 288 3Counceltor Consultant m/month 2 8 12 22 130 285 415 3Training Equipsnt X spread 33X 33X 33X 100X 251 139 390

Staff rnmonth 36 36 14 144 144 504 349 349

D:Ciii) Fellowship m/month 4 4 42 42 3Job Search Consultant r/month 2 2 12 26 38 3

Equipment X spread 40X 60S 100X 24 24Staff r/month

0:Div) Fellowship m/month 2 4 2 8 79 79 4Industrial Consultant m/month 3 3.5 1 7.5 43 95 138 4Adjustment Equipment X spread 50X SO% 100X 17 17

Staff rnmonth 60 120 120 120 120 540 369 369

.. ..... ..... ..... ..... ..... ..- *-... =-,--. unsun3 332 ss33s333 s33 3

6S520 3.021 9,541,,,,,..... .. . ..... ........... ..... ...... ..... cancan 3 33a3

- 96 - ANNEX 8Page 4 of 15

HUNIIARY

ML34AN RESOJRCE DEVELOPMENT PROJECT TA

ESTIMATED QUANTITIES AND COSTS

28-Feb-91 - -- -- - -- - - - -- ..-.. . . LocaL Foreign Total Technicat

10:10 Type LUnit -. Distribution of Quantities . Total Esc. Esc. Esc. Assistanc

of of . --- ---- -- .Qty of Costs Costs Costs Package

Agency Objective Irput Irput 1991 1992 1993 1994 1995 1996 Irput USS '000 USS '000 USS '000 Number

,,, ... ,,................. ....... .............. ....................................... ..... . . . 33.33

It IMPROVE ADULT TRAINING

.s....man.ws.u... S........ .3333s33333333f333S333us33usuu*sgs.a.s.nns i:

144: Item (a)(i): Fellowship m/month 15 15 139 139 5

Neti- NTC 8anagement Consultant n/month 5 5 28 62 90 5

onal anc Programs Equipment X spread 50X 50X 100X 118 118

Model Facilities X spread 100S 1002 11 11

Staff nvmonth 60 120 120 120 120 540 369 369

Materials/recur 202 20S 20X 20S 20S 1002 276 276

Item (a)(ii): FeLLowship n/month 4 4 42 42 S

Curriculum Consultant rn/month 6 6 35 77 ill 5

Support Eqjipment X spread 502 50X 100X 118 118

Item (a)(iii): Fellowship rn/month 3 3 33 33 5

Special Consultant m/month 3 3 17 38 56 S

Studies Erljipment X spread 50X 502 100X 61 61

IOL: Item (b)(i) FeLLowship m/month 10 10 20 187 187 5

Develoc RTC/RATC Consultant rn/month 2 2 4 23 50 73 5

Tef

(RATC) Adeinistration Equipment X spread 502 502 1002 912 912

Nsterials/Staffing 3S 102 172 34X 34X 1002 27,350 27,350

Facilities X spread 302 402 302 100S 30,058 30,058

Item (b)(ii) Fetlowship m/month 5 5 10 96 96 5

Basic Consultant m/month 2 2 4 24 52 76 5

CurricuLa Books X spread 1002 100X 37 37

Equipment X spread 502 502 1002 3,448 3,448

Item (b)(iii) Fellowship mr/month 5 5 10 96 96 5

Customized Consultant m/month 2 2 4 24 52 76 5

Training Equipment X spread 502 502 1002 945 945

Item (b)(iv) Fetlowship m/month 15 15 30 288 288 5

vocationaL Consultant m/month 15 15 30 177 390 567 5

CurricuLa Books X spread 302 402 30X 1002 135 135

Equipment X spread 302 402 302 100X 14,572 14,572

Item (b)(v) Fellowship m/month 5 5 10 96 96 5

Small Consultant m/month 2 2 4 24 52 76 5

Business Eq4uipment X spread 502 502 100X 295 295 *

Item (b)(vi) FelLowship m/month 5 5 51 51 5

Councelling & Consultant rn/month 5

Placement Equipment X spread 50X 502 1002 295 295

- 97 - ANNEX 8Page 5 of 10

HUNGARY

IUMAN RESOURCE DEVELOPMENT PROJECT IA

ESTIMATED QUANT!TIES AND COSYS .- .-

284feb-91 - -- - -- - - - .- -. Local Foreign Total Techn:cal

10:10 Type Unit D Oistribution of Quantities - Total Esc. Esc. Esc. Assistanc

..................... of of .. .- ..... ..... ..... Qty of Costs costs Costs Package

Agency objective Irpit Irput 1991 1992 1993 1994 1995 1996 IrPut USS '000 US$ '000 USS '000 Number

....................... ....... ....... ... ..... ....- .... ..... ..... ..... ..... usges 9.9s-am causes uxuu-x

MOL: Item (c)(i) f O oI ship rm/month 2 2 4 43 43 5

m4obie Criteria & Consultant m/month 2 2 12 26 38 5

Train- Design Equipment X spread 50X 50S 100X 918 918

ing

Item (c)(ii): Fellowship n/month 5 5 5

Isplenment at 2 Consultant r/!month 3 3 17 38 56 5

Regionrl Equipment X spread 50X 50X 100X 1,224 1,224

Training Facilities X spread

Centers Recurrent Costs/Staff 24 36 48 108 74 74

58,519 24,992 83,511

...3.

..... ..... ..... ..... ..... .... A *-s3 cas3es 3at3t

-98 - ANNEX 8

Page 6 of 10

IIMGARY

HUI4A RESOJRCE DEVELOP1ENT PROJECT TAESTIKATED QUANTITIES AND COSTS - -

28-Feb-91 .- - - -. . . .Local Foreign Total Technical10:10 TYPO Unit . O.istribution of Quantities Total Esc. E-. Esc. Assistanc

- - -- ------------ of of ... --.. -- - - - Qty of Costs Costs Costs PackageAgency Objective Input Irsu t ¶991 1992 1993 19 1995 1996 InpJt USS '000 USS '000 USS '000 Number

..... .....,.......... ... ....<-.-----@----*~s-w- *@ -- --"*"Z ---.............................................. ....... ....... ... ..... ..... ..... ..... .... ..... ..... Mns Bae*.Sonm

III IMPROVE YOUJTH EDUCATION AND TRAINING

MOL Item (a)(i): Fellowship mVmontn 10 10 90 90 6NationaIDefine Nationat Consultant nmmonth 6 6 34 74 108 6Model Model. Staff, PIU m/month 5 S 5 5 5 Z Z 17 17

Item (a)(ii) Fellowship m/month 6 6 54 54 6Assistance in Consultant nVmonth 6 6 6 18 104 230 334 6ProcureXnet Equipment % spread 100% 100% 56 56

Staff rnmonth 60 60 60 60 60 300 203 203

Item (a)(iii): Fellowship m/monthDefine Proced. Consultant m/month 6 6 34 74 108 6for Voc. Curric Equipment % spread 50% 50% 100% 118 118

alL: Item (b)(i): Fellowship m/month 15 15 30 283 283 6Develop Develop 15 Consultant rn/month 15 15 30 177 390 567 6Cu;ri- voc. Curricula Staff sm/onth 45 45 90 60 60rule

Item (b)(ii): Fellowship m/month 7 7 14 132 132 7DOvelop Seven Consultant rnmonth 7 7 14 83 182 265 7Basic Curricula Staff Vmnth 7 7 14 9 9

"OL: Item (c)(i): Fellowship rm/month 20 20 20 60 577 577 6Inple- Implement 15 Consultant rnVmonth 15 15 15 45 271 595 866 6mint vocational Equipment % spread 30% 30% 40% 100% 21,720 21.720Curri- Training Focilities X spread 30% 30% 40% 100% 31.693 31,693cula Curriculo Books X spread 30% 40% 30% 100% 72 72

Recurrent Costs 2.556 2,556

Item (c)(ii): Fellowship m/month 20 20 20 60 577 577 7Implement Seven Consultant m/month 7 7 7 21 126 278 404 7Basic Curricuta Equipment % spread 30% 30% 40% 100% 3,620 3,620

Books % spread 30% 40% 30X 100X 177 177Facilities X spread

Item (c)(iii): Fellowship m/month 3 3 6 5T 57 7Establish two Consultent m/month 1 1 6 13 19 7Audio-visual Eouipment % spread 50% 50% 100% 089 489Centers Staff rVmonth 60 120 120 120 420 M2 292

- 99 - ANNEX 8Page 7 of 10

"4JGARYUlaiA RESCURCE DEVELOPMEIT PROJECT TAESTIMATED QANTITIES AND COSTS ......

28-Feb-91 . ----- ... - ---- - - - - Local Foreign Total technical10:10 Type unit -.- olstributlon of Quantities - Total Esc. Esc. Esc. Assistanc

-...-- 6---.....-... of of .. O.. ..... .. I.. -. ...l ty of Costs Costs Costs PackageAgency Objective Irput lrtut 1991 1992 1993 1994 1995 1996 Irtiut USS '000 USS '000 USS '000 Nlmber

...... I.._ ................. ....... ... .... ..... ..... ..... ..... ..... ..... ................. '' .''.''.'.''''. '''*-a-5s-tg:gs :sssm tuan -*uz

CL.: Item (d)(i): Fltowuhip nm/onth 20 20 186 186 3Vocat- Develop Corultant nm/onth 2 2 12 26 37 3ional Model (20) Staff mJmonth 240 240 240 240 960 62 662Guidance

Item (d)(ii) Fellowship m/monthIlplement Consultant n/Wnth 2 2 12 26 37 3Vocational Equipment % spread 50% 50X 100% 367 367Guidrance model Staff nmonth 7 r5 5

MOL: lten (e)(i): Fellowship m/month 5 46 4S 6Staff Devetop NationalConsultant m/month 2 2 12 26 37 6Train- Staff Training Staff nmonthing

Item (e)( i): Fellowship m/month 25 25 25 75 721 721 6Impl. National Consultant m/month 15 15 i5 45 271 15 866 6Staff Training Equipment X spread 30X 701 1001 2,156 2,156Plan in 5 Cntrs Staff nVmonth 30 60 60 60 210 146 146

IOE: Item (f)(i): Feltlowship m/month 15 1S I" 144 6si- Develop Biling. Consultant m/month 5 5 29 64 93 6Lingual Training

item (f)(ii): Fellowship m/month 5 5 6lnplmt Biling. Consultant m/month 40 40 30 110 659 1,450 2,109 6Vocational Trg Equipnent X spread 301 70X 100S 370 370

.. ., , ..... ..... ..... ..... ..... S-gt33 332252 :3333 :3=

37,47 36,038 73,509..... z... ..... 3............... ..... 3..... 253x 3xxozc3 :333 33a=.

- 100 - ANNEX 8Page 8 of 10

HMUGARY

HUNAN RESOURCE DEVELOPMENT PROJECT TA

ESTIMATED OUANTITIES AND COSTS - -

28-Feb-91 - - - - - -. . . . Local Foreign Total Technical

10:10 Type Unit -... Distribution of Quantities --- Total Esc. Esc. Esc. Assistanc

- o of of .- -. -- -ty of Costs Costs Costs Package

Agency Objective Input Input 1 91 1992 1993 1994 1995 1996 Irput uSS '000 USS '000 uSS 000 Namber

..... .................. ....... .......... . ... ..... ....... ....... .....-. ..... '' ..... ''' .'.... Z-*agg- 8

IV. LANGUAGE TRAINING

Lang- Provide LenguageFellowship rVmonth 120 180 200 180 680 4,038 4,036 8

uage Trng Capacity Visits rnmonth 20 20 20 20 80 4 73 473 8

Train- in and out of Consultant rnmonth 100 130 150 120 500 2,962 5,925 8,887 8

ing SchooL. Equ1pment X spread 102 302 502 102 1005 1,185 1,423 2,608

Insti- Software X spread 102 302 50X 10X 100X 119 119

tute Facilities X spread 202 30X 502 1002 586 586Main & Ops 2 spread 52 202 252 50S 1002 2,422 2,422

Staff 2 spread 15X 252 302 302 1002 3,576 3,576... ..... ..... ...... ................................ sa-a S8zA zzzz5=3 =axz=::

10,733 11,977 22,710........ ....... ...... ..... ..... ........ .... ..... r== :==:::

- 101 - ANEX t3Page 9 of 10

HIIARUYHUKUI RESOiCE DEVELOP9ENT PROJECT TA

ESTIK.ATED QUANTITIES AND COSTS . .. ...

28-Feb 91 - - -.. . . LOCal Foreign Total Technicat10.10 Type 4nit -Distribution of Quantities Total Esc. Esc. Eac. Assistanc

-.......... . ot of - Qty of Costs Costs Costs PackageAgency ObJective Irput Input 1991 1992 1993 1994 1995 1996 IruPUt US$ '000 USS '000 USS '000 Nuiber

V. HIGHER EDUCATION AND RESEARCHs.--*...

WE Item 0l) Fettowshio rn/month 120 400 400 400 200 1,520 9,729 9,729 Individua(Higher Fi'a ncing the Conauttar, m/sonth 20 20 20 20 20 100 547 1,203 1,750 IndividuaEduc) "Catching up Reoarch % spread 20% 2S% 25% 20% 10% 100%

With Europe Equflpnt % spread 8% 24% 38 30% 100% 3,386 32,480 35,865Funid. Software % spread 8X 24% 38% 30% 100% 4,514 11,286 15,800

Facilities % spread 8% 24Z 38% 30% 100% 29,907 29,907staff % spread 20% 25% 25.i 20% 10% 100% 4,581 4,581

... ..... ...... ... .... .. . .8..... ......... '. ..... .gaSSma ussx ssau

42,934 54,698 97,632...... .. ..... ..... ...... ..... ..... ...... ..... g .. S .%seS -g.--.:

- 102 - ANNEX 8Page 10 of 10

NWUIA ESGMCI OtELOP9ENT PROJECT TASTIMATED OJAWTITIES AND COSTS . -

28'Feb91 ... Local Foteign Total Technical10:10 Type Unit -.DitrlbUtion of 04untitles Total Fac. Esc. Esc. Assistanc

....................... of .................. ... Oty of Costs Costs Costs PackaqeAgency Objective Iirpt iut 1991 192 1993 1994 1995 1996 Irput USS '000 USS '000 usS '000 Ni.rber

VI. SCIENCE AND TECHNOLOGY

OTKA InstrutmntCenters Equlpnt X Wpred The y dlsttibutlon for oll the ',003 10,457 25,460

It_ uwnder S&T (except for staff)Is done thru I o wlts/yaar, not X spread

Infor tion Comuters spreod 16,815 6,682 23,497NetworkInfrastructure

OTKA Fund Rosearch X spraod 1,794 2,110 3,904

=+... .... .. .... .. .... .. ..... .. ...... .. ..... .*.F.sw ====:= =:= .= ...........;:

33,611 19,250 52, 41........ ..... ..... ..... ..... ..... .. '.'... ''''''a::=:: := =:- z-::==

- 103 -

Annex 9

HUNGARYHuman Resource Development Project

Staff Appraisal ReportSchedule of Disbursements

I B R D | Disbursements Disbursement ProfileFiscal ------------------------- This Hungary a/Year & | Quarter Cumulative | Project AverageQuarter ----- US$ Millions ------ -------- % -----------

I 1 1 -~~~IsI -IFY92

First I 0.0 0.0 | 0.0 |Second 10.0 | 10.0 I 6.7 I 6.0 IThird I 5.0 15.0 I 10.0 .Fourth I 5.0 I 20.0 | 13.3 | 14.0

FY93First I 8.8 I 28.8 I 19.2 I ISecond j 8.8 | 37.5 | 25.0 | 24.0 |Third | 8.8 | 46.3 | 30.8 |Fourth ! 8.8 I 55.0 I 36.7 34.0

FY94First I 12.5 I 67.5 45.0 I ISecond 12.5 i 80.0 | 53.3 | 45.0 |Third I 12.5 I 92.5 I 61.7 | IFourth | 12.5 | 105.0 | 70.0 | 56.0 |

FY95 IFirst | 10.0 | 115.0 I 76.7Second | 10.0 | 125.0 | 8t.3 I 67.0Third | 10.0 I 135.0 | 90.0Fourth | 10.0 | 145.0 | 96.7 | 75.0

FY96First 2.5 | 147.5 | 98.3Second I 2.5 I 150.0 | 100.0 I 86.0

I II 94.01

a/ The country profile for Sector Investment Lending.

- 104 -ANNEX 10

,ANNS 10

Bibliography of Materials in the Project File

1. Hungary: The Transition to a Market Economy -- Critical Human ResourcesIssues (Bank Report No. 8665-HU, Green Cover, August 1990)

2. Council of Mirnisters Decree on Human Resources Program (October 1990)

3. Adult Training Investment Program, MOL (July 1990)

4. Updated Unemployment Scenarios (Bank Project Team, December 1990)

5. Vocational Secondary Reform Investments, MOL and Appraisal Mission(October 1990)

6. Higher Education Investment Program, MOE (June 1990)

7. Higher Education Sample Proposals for CEF (June 1990)

8. First Round Draft Proposals for CEF (October 1990)

9. HAS Investment Plan for IIF, HAS (October 1990)

10. HAS Report on Previous Operations of OTKA (October 1989)

11. HAS Report on Scientific Instrumentation Centers (October 1990)

12. Project Implementation Manual (December 1990).