Projekt: DECENTRALIZACIJA I REORGANIZACIJA HRVATSKOG ZAVODA ZA ZAPOŠLJAVANJE, CARDS 2003

Project: DECENTRALIZATION AND REORGANISATION OF THE CROATIAN EMPLOYMENT SERVICE (CES), CARDS 2003 EuropeAid/119446/C/SV/HR

“Feasibility Study on the appropriateness of a National Training Centre and a certified competency – based programme”

Evangelos Bountalis Zagreb, September 2007 TABLE OF CONTENTS

1. INTRODUCTION 4 1.1. Executive Summary 4 2. CURRENT SITUATION ANALYSIS 6 3. PROPOSED SOLUTION AND MAJOR ALTERNATIVES 11 4. COST – BENEFIT ANALYSIS 20 5. RISK ANALYSIS AND IMPLEMENTATION PLAN 29

6. ANNEXES 32 6.1. ANNEX I : Feasibility Study Questionnaire 6.2. ANNEX II : Related Documents

2 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

ABBREVIATIONS

MAEPMeasures of Active Employment Policy CCT Croatian Chamber of Trades CEE Croatian Employment Service EC European Commission EEC European Economic Community EES European Employment Strategy ESF European Social Fund EU European Union FS Feasibility Study FSQ Feasibility Study Questionnaire LL Lifelong Learning OECD Organization of Economic Cooperation and Development MELE Ministry of the Economy, Labor and Entrepreneurship MSESMinistry of Science, Education and Sports MF Ministry of Finance MJ Ministry of Justice NEAP National Employment Action Plan AEIP Annual Employment Incentives Plan PES Public Employment Services ToR Terms of Reference VET Vocational Education and Training VET AGENCY Agency for Vocational Education and Training

1. INTRODUCTION

1.1. Executive Summary This Feasibility Study is conducted aiming at:  The examination of the appropriateness of the establishment of a National Training Centre for the Vocational, the Continuous Training and the Professional Development of CES employees.  The review, presentation, and consultation of the feasibility study with the basic stakeholders (R.O. Directors, Directors, Heads of Divisions and members of the staff of CES) on the basis of presented recommendations (Structural, organizational, financial, etc.).  The proposal of an Implementation Plan on the basis of the outcome of the consultation with the basic stakeholders. The methodology employed for the conduct of the feasibility study is shown in the following graph:

FEASIBILITY STUDY METHODOLOGY

CURRENT SITUATION ANALYSIS

Assessment of Internal Assessment of External Environment Environment

Strengths & Weaknesses Opportunities & Threats

SWOT ANALYSIS

CONCLUSIONS/ PROPOSED SOLUTION

In Part two, the analysis of the current situation (Internal-External) is assessed based on existing documents review (CES profile, CES Strategy 2007-2001, Training Needs Assessment). In Part three, the proposed establishment of a National Training Centre for CES personnel together with major alternative solutions is discussed. Part four presents a cost-benefit analysis for the proposed training centre with possible funding solutions. Finally, Part five discusses the possible risks analysis and the Implementation Strategy for the establishment of the proposed training centre.

2. CURRENT SITUATION ANALYSIS

2.1Internal Environment The assessment of the elements of the Internal environment, as presented in previous project reports leads to the following conclusions:  CES staff faces difficulties in fulfilling successfully its every day and ever changing activities due to lack of the necessary skills and professional competences.  CES personnel training system is designed mostly on advisors training provision whereas the other employee categories training is mostly sporadic in nature and thus not fully recognizing the expectations for professional development.  The needs of CES employees for special professional skills have dramatically increased due to : o the new activities coming from the implementation of annual and multi-annual programs and pre-accession to EU obligations and o the rapidly changing circumstances in the Labour Market.  The modern ICT innovations, applied by the private Labour Market companies, offer them a comparative advantage over CES.  The lack of connection between the CES employees’ training and professional development on the one hand and performance measurement, career development and motivation on the other, has a detrimental effect on their ability to understand the organizational mission and strategy and to fulfil their obligations related to the achievement of specific objectives and targets. The documents assessed are presented in the following diagram:

CES INTERNAL SITUATION ANALYSIS DOCUMENTS

CES PROFILE

CES STRATEGY

INTERNAL SITUATION

NEAP 2005 / 2008 ANALYSIS

AEIP 2007

AEIP 2007 MEASURES

2.2 External Situation Analysis 2.2.1 Croatian Institutions of Vocational Training Although the vocational training and professional development of Croatian Civil Servants is in early stages, there exist few institutions and agencies offering respective programs of ad hoc nature: a. Agency for Vocational Education and Training1 The Agency for Vocational Education and Training (VET) was established in January 2005 and started to operate in September 2005. The organizational structure of the agency is presented in the following diagram:

DirectorDirector’’ssofficeoffice

DepartmentDepartment forfor Specialist,Specialist, DepartmentDepartment forfor ResearchResearch andand DepartmentDepartment forfor AdministrativeAdministrative andand VocationalVocational EducationEducation InternationalInternational CooperationCooperation SupportingSupporting OperationsOperations DevelopmentDevelopment

SectionSection forfor Legal,Legal, SectionSection forfor PartnershipPartnership AccountingAccounting andand andand RegionalRegional DevelopmentDevelopment SupportingSupporting OperationsOperations

SectionSection forfor ITIT SectionSection forfor andand DocumentationDocumentation EducationalEducational ProgramsPrograms

SectionSection forfor PedagogicPedagogic SupportSupport andand TrainingTraining

1 For extensive reference to The Agency for Vocational Education and Training see also www.aso.hr 7 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

The mission of the agency is the Development of the Vocational Education and Training System through:

 Inclusion of all social and other partners in development process  Continuous teacher training and education  Reconstruction of occupations according to the labor market needs  Defining the National Qualification Framework  Creating open curricula which match the competences needed according to the labor market, universities and national and regional development  Assistance from two CARDS VET projects (app. 5,5 mil €) that are implemented through the Agency

The main objectives of the agency are:

 Sectors’ analysis.  Definition of occupations by sectors.  Definition of competences for single occupations and qualifications.  Creation of National Qualification Framework (NQF) accordingly to European Qualification Framework (EQF)  Creation and implementation of modern and open curriculum.  Quality assurance.

VETIS (system of information for managing VET) One of the notable achievements of VET is the establishment of VETIS, a system of information to manage VET activities and interventions. The VENTIS:  Combines and allows analysis of all major data: o About schools, students, staff, equipment, buildings, student dormitories, registration for competition, registration of teachers for training, etc.  Organizes the data needed for quality analysis, planning, monitoring and managing VET system

b. Agency for Adult Education2

The Agency for Adult Education is a public institution established by the Decree of the Government of the Republic of Croatia in May 2006. The activities of the Agency include monitoring, development, evaluation and improvement of the adult education. The Agency is established as a part of the Government Strategy for Adult Education, adopted in 2005 and based on the lifelong learning principle.

2 For extensive reference to The Agency for Adult Education see also www.aoo.hr 8 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

The goals of the agency are:

 replacing permanent employment by permanent employability  increase of the adult involvement in lifelong learning  literacy of the 21st century becoming a reality  coordination of the educational system and labour market  promotion of the culture of learning

The activities of the agency are:

 performing analytical and development activities within the adult education sector  coordinating suggestions of expert bodies  controlling the expert work of adult education institutions  performing expert and counselling activities  implementation of professional training and improvement of the employed in the area of adult education  innovation, monitoring and evaluation of the adult education programmes implementation  encouraging cooperation and participation in the implementation of programmes and projects connected to the area of adult education  managing the database and providing information for public administration bodies and for the ministry in authority about the records and other relevant information connected to the monitoring of the condition and development of adult education activities,  preparing analyses of business processes of activities,  defining criteria for the establishment, implementation and control of systematic funding of adult education in programme, investment and material operation,  performs other activities defined by the Decree on the establishment of the Agency  perform activities and operations of the National agency for the implementation of the Integrated Life-Long Learning Programme and Youth in Action Programme of the European Commission

Institutions for Adult Education

Adult education institutions implement programmes for the acquirement of the first occupation, professional improvement, additional trainining and re-training.

Institutions that perform the activities of adult education in Croatia are:

 open universities (public and private)  primary and secondary schools that implement the adult education programmes  colleges  education centres in companies  various private schools (for example foreign language schools)  driving schools 9 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

 professional associations and organizations  non-government associations and organizations  political parties  employers' associations  trade unions  penological institutions and institutes  religious institutions  foreign institutions, schools and organizations

Adult Education Institutions can be established by:

 the Republic of Croatia,  local and regional government units,  other legal and physical entities.

Adult education institutions can perform the programme if they have registered adult education as their activity and if they meet space, staff and material criteria defined by the program that must be in accordance with the standards and norms for its realization. The funds for financing and encouraging adult education are provided for from the state budget, local and regional government budget and directly from employees attending the programme and their employers.

According to the Commercial courts data, in Croatia there are:

 82 public open universities, 2 open universities and 18 teaching establishments  7 university extensions  20 cultural centres and 3 homes of culture

There are 23 more legal entities (limited liability companies and stock companies) that perform adult education activities registered at the Commercial courts.

c. Central State Administrative Office : Centre for Expert Training and Development of Civil Servants3 The centre for Expert Training and Development of Civil Servants, organized as a Department in the Central Administrative Office, is responsible for:  Executing the strategy of vocational training and professional improvement of civil servants.  Establishing a system of vocational training and professional improvement. 3 For detailed reference to the Centre for Expert Training and Development of Civil Servants see also Government of the Republic of Croatia, Strategy of Vocational Training and Professional Improvement of Civil Servants. 10 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

The Personnel Department in order to develop appropriate programs adapted to needs of civil service systematically collects all information relevant to the development of training programs related to the every day needs of civil servants. The planning of training programs consists of organization and identification of priorities among different activities aiming at vocational training and professional improvement. There exists a variety of programs according to professional needs (i.e. preparatory pre – entry programs for new candidates for positions in state administration, introductory programs for new public servants, in – service training programs, etc.).

3. PROPOSED SOLUTION AND MAJOR ALTERNATIVES 3.1. Proposed Solution for the establishment of National Training Centre

3.1.1. Arguments for the establishment of a national Training Centre The thorough presentation and detailed examination of the elements of the Internal as well as the external environment in the previous part, inevitably leads to the following conclusions/starting point for the development of the argument for the appropriateness of the establishment of a CES training centre:  CES personnel do not possess the necessary skills and professional competences to face its every day and ever changing activities due to the rapid changes of the working environment (Labour Market)4.  CES personnel training system is designed mostly on advisors training provision whereas the other employee categories training is mostly sporadic in nature and thus not fully recognizing the expectations for professional development.  The existing training agencies and institutions have formulated strategic vocational training and professional development plans but nevertheless their contribution remains limited and mostly at the level of good will being unsuccessful to offer concrete assistance to the CES to fill the gaps in its personnel training needs.  CES internal training programs (Central-Regional-Local) have proved to be both costly and not very flexible.5

4 As it is stated in the Training Needs Analysis (see respective document). 5 To give an example the three cycles of training offered to the 1200 councillors took 4 years to be implanted and cost approximately 8.000.000 Kn. 11 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

 The needs of CES employees for special professional skills have dramatically increased due to the new activities coming from the implementation of annual and multi-annual programs and pre-accession to EU obligations.  The combination of two opposing factors (the increase of the proportion of highly specialized tasks and deterioration of actual professional skills) creates a detrimental effect of CES employees’ morale further lowering their performance standards and actual achievements.  The participation of CES in the implementation of EU projects containing training deliverables and tasks seems to have an «ad hoc» character without strategic planning and targeting.  The modern ICTs innovations, applied by the private Labour Market companies, offer them a comparative advantage over CES.  The lack of connection between the CES employees’ training and professional development on the one hand and performance measurement, career development and motivation on the other, struggles their ability to understand the organizational mission and strategy and to fulfil their obligations related to the achievement of specific objectives and targets6. It is widely recognized that the Croatian Employment Service internal and external environment has dramatically altered due to the following factors:  Rapid and drastic changes in the Labour Market.  Rapid and drastic changes in Information Communication Technologies with implications in the formulation and execution of training programs.  Intensification of competition with the private sector companies working in the field of service delivery for the unemployed.  Great inadequacies in the educational system which fails to follow the market needs.  Lack of special skills for the CES personnel especially for staff working with «sensitive» categories of unemployed and job seekers (i.e. Handicapped persons). On the one hand, it is beyond doubt that there exists a considerable concern about the capabilities of the personnel of Croatian Employment Service to achieve its strategic objectives as well as to perform the every day activities with its basic stakeholders (Employers, Job Seekers, and Unemployed). As stated in the «building CES strategy» workshop, the two Critical Success Factors for strengthening the Human Potential of CES are:  Permanent education/training of CES employees  Establishment of a National Training Centre for the training of CES employees. Therefore, the establishment of a National CES Training Centre as the leading force in the system of continuous training and professional development of CES employees will ensure the improvement of skills of the personnel (Vocational, Higher

6 As stated in the Training needs Analysis and in the Strategy 2007-2011 Document. 12 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

Education, etc.) in order for the Organization to achieve its objectives as stated in the mission statement as well as in NEAP 2005-2008. On the other hand, Croatian Employment Service, in order to pursue its urgent reform program related with the strategic goals of NEAP and AEIP, should consider a systematic care for continuous training and development of its personnel as a high priority for the purpose of:  Solving its personnel professional problems  Delivering quality services to its customers (employers, job seekers and unemployed).  Achieving efficiency and effectiveness. Furthermore, according to the results of conducted surveys ( project “Croatia in the 21st century – Public administration”, “Report on the assessment of the training needs for civil servants in the Republic of Croatia”, delivered as a part of project “CARDS 2001 – Public Administration Reform” (CARDS – Community Assistance for Reconstruction, Development and Stabilisation), the evident lack of qualified and trained civil servants in the Croatian Civil Service is more intensified in the Croatian Employment Service, due to the absence of appropriate education for civil service employees which would ensure adoption of relevant skills and appropriate professional knowledge. Existing educational system is primarily based on theoretical knowledge and does not include practical actions. The need for vocational training and professional improvement is identified at the CES (TNA of the project “Decentralization and Reorganization of Croatian Employment Service”). Following that point of view, the Croatian Employment Service should consider a systematic care for continuous training of its employees, as the key condition for functioning of a modern, efficient and effective Institution. Therefore, the goal of creating a system of vocational training and professional improvement of CES personnel will contribute to its professional capacity, efficiency and effectiveness, horizontal mobility and the overall improvement and flexibility. Due to the above mentioned challenges, the CES needs to change radically its philosophy and practice in planning and executing personnel training strategies and programs. To that end, a viable solution seems to be the assignment of such a highly specialized responsibility for Vocational Training and Continuous Professional Improvement of its personnel to an internal institution, namely a Training Centre. The findings of the «Cost-Benefit Analysis» show that the benefits of a National Training centre for CES far overweight the costs, if it is assumed that the facility plays a significant role in the training market and it manages to explore funding from other «external»sources, namely foreign /EU investments. Finally, the CES with the establishment of the above mentioned Training Centre for vocational training and professional improvement will succeed in making a step forward in adopting the existing EU standards.

3.1.2 SWOT analysis The above mentioned assessment of the external as well as the internal environment of CES organization and the extensive reference to the arguments for the establishment of a National Training Centre for vocational training and professional life-long development of its employees, necessarily leads to the schematic presentation of the of the Strengths, the Weaknesses, the Opportunities and Threats (SWOT Analysis Matrix) of such an undertaking.

SWOT ANALYSIS

STRENGTHS WEAKNESSES

 Commitment of CES personnel and  Absence of sufficient Legal Administrative Leadership for the Framework for the training of public establishment of a National Training service employees and especially for Centre CES employees.  Clear cut strategic objectives in CES  Old-fashioned structures and strategy and Action Plans (multi year functions in CES organization. and annual) in relation with the  Insufficiently/ill defined promotion of policies and activities to personnel competences. strengthen personnel capabilities to  Education system insufficiently achieve the set objectives of the linked with the Labour Market needs. organization.  Insufficient number of well  Definite and recently conducted articulated and capable trainers and Training Needs Analysis and personnel training programs connected assessment. with the Labour Market function and  High quality IT technology equipment, dynamics. facilities and support.

OPPORTUNITIES THREATS

 EU pre-accession funds for financing  Under funding and insufficient CES training programs and curricula. financial support.  New services for CES customers  Inadequate political commitment over (Employers and job seekers). time for the establishment and further  New Legal Framework for adult development of the training Centre. training and structural education.  Inadequate training of personnel.  The establishment of National  Insufficient/inactive legal regulations. Information centres.  Rigid system of training enrolment  Active cooperation with other policy. institutions (Internal and external)  Insufficient institutions for Vocational working in the field. Education.  Excellent existing networking with  Insufficient institutions for adult local partners. education (programs fragmented and  Enhancement of the existing local not connected with the needs of the partnerships. Labour Market.

3.1.3 Organizational structure and Financing

The National Training Centre for vocational training and life-long training of CES employees will fulfil the following tasks:  Ensures methodological unified planning.  Issues, implements and evaluates the delivered programmes and achieved results, through an ISO certified procedure7.  Identifies the overall training needs at all levels of CES.  Evaluates all activities of vocational training and professional improvement of CES personnel and other activities aiming on enhancing staff’s professional skills (in cooperation with organizational units in state administrative bodies responsible for personnel issues and vocational training and professional improvement).  Cooperates with CES personnel development structures (Departments, Divisions) in all levels (Central and Regional).  Cooperates with similar organizations which implement programs for vocational training of civil servants on the state and international level,  Monitors the implemented programs so as to keep high level of quality.

With the establishment of the National Training Centre a new role to the Employment Placement and Preparation Departments Central and Regional (Personnel Development) should be assigned, especially regarding monitoring, implementation, and human resources management and development strategies.

This new role deals with:

7 A good example of such training provision from Public Institute certified by ISO is the case of the Greek National Centre for Public Administration, www.ekdd.gr 15 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

 The development of drafts of annual plans for performance appraisal of CES personnel which should represent the base of an overall plan of vocational training and professional improvement.  The estimation of needs for vocational training and professional improvement should be integrated in the system of performance appraisal of employees, concerning the position they occupy as well as their professional development and career advancement.  The design of detailed job description for each working place, including appropriate assessments related to permanent vocational training and professional improvement for each employee occupying specific working place.

To that end, special attention shall be paid to the vocational training and professional improvement of the employees serving in these departments, which are responsible for human resources management and implementation of new methods and rules envisaged for the modernization of civil service.

The National Training Centre Structure is presented in the following diagrams:

CROATIAN EMPLOYMENT SERVICE

NATIONAL TRAINING CENTRE

MANAGING BOARD

TRADE UNIONS EMPLOYERS GOVERNMENT REPRESENTATIVES REPRESENTATIVES REPRESENTATIVES

NATIONAL TRAINING CENTRE DIRECTOR GENERAL

CENTRAL OFFICE

REGIONAL REGIONAL OFFICES DIRECTORS WITH LOCAL OFFICES

NATIONAL TRAINING CENTRE

Director

UNIT OF TRAINING AND UNIT ADMINISTRATIVE AND UNIT OF PUBLIC RELATIONS RESEARCH FINANCIAL MATTERS AND ACCREDITATION

Head of the Unit Head of Unit Head of Unit

SUB-UNIT SUB-UNIT SUB-UNIT SUB-UNIT OF OF OF OF PUBLIC PROGRAMS & RESEARCH ACCREDITATION RELATIONS CURRICULUM

Financing

There exist a variety of funding solutions for providing the necessary means for the establishment and operation of CES Training Centre:  Government Budget : Expenditure on training services draws directly on government budget deriving from tax contributions (This is the case of most EU countries).  Private Investment : The Employment Agency is covering the expenses of its staff training for courses offered by private training institutions (i.e. State educational institutions) by buying a package of services at a symbolic fee for its employees.  Employees and Businesses Indirect funding : Employees and businesses indirectly finance training and professional development services through national insurance contributions, a percentage of which is earmarked for the Public Employment Organization (i.e. in Greece and Ireland).  Other sources of Funding : o The training activities are funded by the imposition of a levy on the payroll of private or semi-private entities. o Some sectors develop a number of services based on training levy funds from employees and employers o Employers fund aspects of training services through membership fees to the Economic Chamber, to which they are obliged to belong  International Programs : o Participation in the European Social Fund o Benefits from EU funding programs (i.e. Socrates, Leonardo da Vinci).

However, when compared with the investment made by the state, these forms of funding (external and internal), while often having a substantial impact on service development, represent a tiny fraction of the overall outlay.

Therefore, for the purpose of implementation of vocational training and professional development of CES personnel, the Government of the Republic of Croatia should annually allocate at least 3% of the total amount of budget estimated for CES in the Croatian State Budget8.

The Croatian Employment Service should also consider the possibility of use of all the above mentioned domestic and international sources for financing the implementation of training activities.

To that end, the National Training Centre (NTC) Unit responsible for Financial and Administrative issues should have on its disposal the part of funds allocated for special programs aimed at promotion of vocational training and professional improvement (3% of CES annual budget).

Furthermore, it should explore all possibilities to utilize the financial means coming from the implementation of International/EU projects aiming at improving the capacities of Croatian civil service personnel in the field of vocational training and professional development.

3.1.4 Major alternatives One alternative for CES training provision and enhancement of employee skills is to continue the current pattern of training delivery. Currently, as stated above, the CES personnel training system is designed mostly on advisors training provision9. More precisely, the internal training activities have been concentrated on enhancing councillor skills, assessed through validation and evaluation forms. CES councillors undertake three different types of five day training seminars on:  Communication skills  Development of marketing skills  Working in hard situations The seminars are scheduled for a four year period (we are running the third year now) and take place in Zagreb (in groups of 12). The training is being conducted by a group of four trainers which have trained for that purpose. The decision for organizational purposes, content and financing is central. The cost of these training seminars is estimated to 2.000 kounas per councillor. The total cost of the training is estimated to 7.200.000 kounas (2000 per personX3 seminarsX1200 councillors).

8 This is in full accordance with the 3% proportion devoted in the National Budget for the training activities of the public Servants. 9 The presentation of the existing training system is based on our structured interviews with the Regional Offices.

There also exists a pool of 22 trainers (trained through internal procedures) that could be utilized in the training delivery. As far as the training activities of the other categories of personnel are concerned, are mostly sporadic in nature and thus not fully recognizing the expectations for professional development. The training needs are assessed by the heads of departments and Divisions. The training content and training issues are discussed in details when the Regional Directors have their periodic gatherings, the final decisions taken by the CES central office (which seminars to be financed). The basic trainings are related to languages and on the job training with the Directors or the Heads of Divisions playing the role of trainers and instructors. CES has established contacts with other institutions and agencies that could be possibly offer training seminars for its employees. However, these contacts have not yet brought any concrete results. The total cost of CES training activities is shown in the following table:

Expense Year 2005 Year 2006 Year 2007 Year 2008 Category (expected) (plan)

Training 413.575 kunas 368.326 kunas 955.500 kunas 1.314.000 kunas /Seminars *

Business 1.586.361 1.763.022 kunas 1.743.000 1.907.000 kunas Trips** kunas kunas

TOTAL 1.999.936 2.131.348 kunas 2.698.500 3.221.000 kunas kunas kunas

* Refers to expenses for training seminars ** Refers to expenses for trips, hotels, other allowances, etc.

It should be stressed that the amount spent for training and skill development of the employees amounts only 1% of the total CES budget. As a commentary on how successfully the above major alternative to the proposed establishment of a training facility in CES, faces the training and professional employee’ development, a quote from the Training Needs Analysis is laid down: «………………………………….  The biggest problems in daily business according to CES management

In answering the question on the biggest limiting factor in successful business the CES managers have identified several internal and external key limiting factors. ………………………………… have identified the insufficient knowledge on systematic human resource management. The fact is that they have identified only a part of HRM, and do not have the overall picture of it.

Apart from the insufficient number of employees, they have mentioned the low level of skills and knowledge of some associates, non-acceptance of novelties and changes in work, insufficient system of motivation and remuneration of associates according to working results. Moreover, the fluctuation of young associates is very common due to relatively low income. … … … … … … … … … … … … … ... Skills and knowledge managers have stated as obligatory and are missing are two-sided communication, reporting and solving of conflict situations as a missing part in daily management. The key work limiting factors from the surrounding are basically related to insufficient awareness of the surrounding on key significance of human resources for the overall development. Moreover, CES managers have stressed as limiting factors of their work the existing institutional attitude which sometimes do not give room to initiative and entrepreneurship of CES employees, as well as frequent changes of law of which CES employees must be aware and which they must follow in their everyday activities. ». The existing training procedures in CES seem to be not cost-effective on the grounds that while cost quite a significant amount of money, on the one hand they do not fully cover employee’ training needs and on the other hand they lack strategic orientation and perspective.

4. COST – BENEFIT ANALYSIS

4.1. Introduction As it has already been stated, a good training system is crucial for any organisation to develop and retain high professional standards of conduct and performance for its staff. In particular, within the context of a consistent and life-lasting personnel training system, the feasibility of an Internal Training Centre in the Croatian Employment Service as a viable « Tool for Personnel Development » is examined as a means of justifying expenditure on the establishment and 20 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO) development of a chore tool in the service of CES for the years to come, in accordance with its Vision and Strategy that states explicitly: «CES is the leading partner in the development of Croatian Labour Market, uniting overall offer and demand for work with the goal of achieving full employment ». Indeed, personnel training and professional development as an entity in itself plays an important role fostering both growth and development of CES organization.

The benefits of establishing a training facility in CES are potentially significant. Properly established this training centre would provide high quality training and professional development not only for the trainees, but also for the trainers. The costs associated with the establishment of the training centre are discussed although this discussion is clearly limited depending on the decisions to be made on the extent and scope of such an institute.

4.2 Practical Quantification Problems

Quantifying these benefits accurately, however, is a very difficult if not impossible task because of several key problems: a. Joint contributions: The training Centre contributions to particular training -related outcomes usually are not the only contributing factor. But to distinguish and measure reliably one part of a joint contribution is very difficult in practice. Efforts to do so inevitably involve ball-park guesses based on judgement. b. Counterfactual scenario: Measuring the net benefits from Training Facility activities also requires identifying the most likely scenario that otherwise would have occurred in the absence CES Training Centre and measuring its likely resultant net benefits. The estimated net benefits from this scenario (see major alternative) must be deducted from those attributed to the Training Facility from the outcomes it has contributed to. Without this step, the above mentioned contribution would be overstated, by overlooking the amount of net benefits that could have been expected in the absence of the Training Centre. c. Other information requirements: Even if these two problems can be resolved, obtaining the information needed to measure reliably the opportunity costs of the Training Centre activities - and resulting benefits (in terms of tax- payers’ willingness-to-pay for them) – has also proved to be a significant further practical hurdle.

For these reasons quantitative analysis was limited to identifying figures of the costs and benefits of the Training Centre activities, rather than deducting the whole stream of estimated benefits and costs from the various outcomes expected to have occurred under the most plausible counterfactual scenario.

In constructing a cost-benefit analysis of the proposed training facility, private and social benefits and costs have to be considered. The net private benefits are the increased benefits the employees derive from the training, less the costs of the training (i.e. personal satisfaction).

The social benefits and costs are those benefits and costs not captured by the employees’ increased income and the training costs. The private benefits and costs may be considered as being split between the employees and the government, with the government receiving taxes and thus perhaps training fees expected to be paid by the participants in the training procedure (employees), are paid as additional training costs from its taxation base.

The establishment of the training facility in CES would logically grow from the proper, strategic application of appropriate resources, aiming at achieving whatever goals are established for its inauguration. Should the CES political Staff agree that such a training centre is desirable as a vehicle to promote standards of CES performance all over Croatia as well as a means of addressing some of the employment policy concerns of the region, then a strong financial commitment for a minimum of ten years must be made during the establishment phase. This must include ongoing operational support, including a commitment to training appropriate personnel to manage and operate all aspects of the National Training Centre.

4.3 Innovative Elements of the CES Training Centre

The establishment of the CES training Centre brings along a set of innovative features relating to its structure and functioning that, at the same time, reveal the added value of the «per se» training activities. In the following lines we present these characteristics which all together represent the Training Centre benefits:

i. Flexibility

The Training Centre is characterized by great degree of flexibility regarding:  The content of seminars.  The training Methods.  The planning and execution of training activities.  The selection of trainers and the content of their training  The training curricula and the training materials *modules, etc.).

All the above mentioned characteristics are related to the contemporary characteristics of the Labour Market and indeed they adapt to their constant change. The responsible Unit for Research and Development deals on every day basis with these matters and is in constant dialogue with the basic stakeholders.

ii. Reliability

Another characteristic of the National Training Centre is its Reliability being continuously related with CES personnel and conducting scientific needs analyses. In this context, the delivered training services are quality services taking into account the needs of the trainees as well as effectiveness principles.

iii. Modernity 22 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

The proposed structure of the new Training Centre is modern structurally and functionally. It does not belong «stricto sensu» to the existing hierarchical order. Modern Information Technologies are utilized for the organization of the activities and for the training delivery. Apart from the obvious economic benefits, this innovative element gives a psychological edge to the Training Centre especially in the demanding place of the Labour Market. Finally, the new Human Resource Management techniques implemented in Training Center’s personnel management contribute to the overall effectiveness and at the same time they present a new paradigm for the rest of the Public Sector and the related agencies and institutions.

iv. Effectiveness

The new Training Centre is cost-effective in its function and strategically result- oriented. It delivers quality services in an economic matter. Furthermore, it brings new attractive training products to the Labour Market having thus a comparative advantage over its competitors. Its benefits exceed the value of the money spent for its establishment setting up a model organization and contributing to the accession to the EU efforts of the Government of Croatia.

v. Certified Service Provision

The new Training Centre will be certified by ISO 9000 for its organization and training activities. Apart from setting up a best practice for the Croatian Public Service, the Training Centre also gives a comparative advantage to the CES for the competition of funds coming from EU sources and other International Projects.

Development and Operation Cost Analysis

It is widely accepted that the cost analysis of delivered services consists a core activity in all administrative levels. Indeed, this analysis makes possible the assessment of cost and benefits of administrative products and/or services. This knowledge might lead to the best utilization of the limited resources of the organization and to the maximization of social benefits in the context of state structure. In this part, the effective management, monitoring and control of the training services provided by the CES National Training Centre is analyzed.

Basic cost categories The basic cost categories are:  Development cost  Operation cost

The Development Cost is calculated at the beginning of the implementation of the project and it consists of:  Equipment cost (Desks, chairs, etc.)  Communication and publications 23 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

 Training cost

The Operation Cost represents all different costs related to the whole function of the project and it can be categorized in to:  Standard costs  Differentiated costs

As far as the Operation Cost of the CES Training Centre is concerned, it could be defined as:  Operational costs referring to its functioning  Maintenance costs

The Operational costs include fixed costs, such as:  Personnel salaries cost  Building costs (i.e. rent)

The Variable costs include the following:  Expendables  Communication costs

4.4.1 Cost Analysis

4.4.1.1 Development costs

Depending on the availability and proximity of existing figures10, in the following table CES Training Centre Development Costs are presented:

1rst scenario: Rent building Facilities

TYPE OF COSTS AMOUNT (In kunas)

1. Equipment (ICT is included) 535.000

2. General (personnel training, publicity, 250.000 marketing and other costs) Total Cost 1st Scenario (rent) 785.000

2nd scenario: Buying Building Facilities

TYPE OF COSTS AMOUNT (In kunas)

1. Building 8.670.000

2. Equipment (ICT is included) 535.000

10 The figures presented come from CES Economic Financial and Accounting Affairs Department. 24 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

3. General (personnel training, publicity, 250.000 marketing and other costs)

Total Cost 2nd Scenario 9.455.000

Based on the above data the development cost (initial establishment) of CES Training Centre amounts to: a. 1.299.000 (Rent building), first scenario. b. 9.455.000 (Buy building), 2nd scenario.

4.4.1.1.1 First Year Operation Cost

a. Personnel salaries cost

PERSONNEL SALARIES ANNUAL COST COST (in kunas)

Trainers (6) 756.000 Staff (15) 1.440.000 TOTAL 2.196.000

b. Variables (Other Costs):

VARIABLES (Other Costs) ANNUAL COST (in kunas) Building rent 514.000

Maintenance, Telephone costs, 300.000 Expendables

TOTAL 814.000

FIRST YEAR OPERATION COST TYPE OF COSTS AMOUNT (In kunas)

1. Personnel Salaries 2.196.000

2. Variables 814.000

3.010.000 TOTAL COST

This table indicates that the total annual operation costs amount to 3.010.000 kunas.

4.4.1.2 Operation Costs for every year operation:

a. Personnel salaries cost

PERSONNEL SALARIES ANNUAL COST COST (in kunas)

Trainers (6) 756.000 Staff (15) 1.440.000 TOTAL 2.196.000

b. Variables (Other Costs):

VARIABLES (Other Costs) ANNUAL COST (in kunas) Building rent 514.000

Maintenance, Telephone costs, 300.000 Expendables

TOTAL 814.000

ANNUAL OPERATION COST TYPE OF COSTS AMOUNT (In kunas)

1. Personnel Salaries 2.196.000

2. Variables 814.000

3.010.000 TOTAL COST

This table indicates that the total annual operation costs amount to 3.010.000 kunas.

BUDGET ANALYSIS

PERSONNEL COST ANNUAL COST (in % kunas) Salaries 2.196.000 72%

Variables (Building rent 300.000 and 814.000 28% other costs 514.000)

TOTAL 3.010.000 100%

The above table indicates that the Personnel cost represents the larger proportion of operational costs, namely 72%.

4.5 Funding Sources

The financial support of the training centre could contain the following sources:

 Government Budget : Expenditure on training services draws directly on government budget deriving from tax contributions.  Private Investment : The Employment Agency is covering the expenses of its staff training for courses offered by private training institutions (i.e. State educational institutions) by buying a package of services at a symbolic fee for its employees.  Employees and Businesses Indirect funding : Employees and businesses indirectly finance training and professional development services through national insurance contributions, a percentage of which is earmarked for the Public Employment Organization. 27 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

 Other sources of Funding : o The training activities are funded by the imposition of a levy on the payroll of private or semi-private entities. o Some sectors develop a number of services based on training levy funds from employees and employers o Employers fund aspects of training services through membership fees to the Economic Chamber, to which they are obliged to belong.  International Programs : o Participation in the European Social Fund o Benefits from EU funding programs (i.e. Socrates, Leonardo da Vinci).

However, when compared with the investment made by the state, these forms of funding (external and internal), while often having a substantial impact on service development, represent a tiny fraction of the overall outlay.

CES TRAINING CENTRE FINANCIAL SOURCES

PERSONN ANNUAL BUDGET PRIVATE EU EUROPEAN EL COST COST INVESTMENT PROJECTS SOCIAL FUND

2.196.000 2.196.000 2.196.000 - - -

OTHER ANNUAL BUDGET PRIVATE EU ESF COSTS COST INVESTMENT PROJECTS

814.000 814.000 814.000 - - -

TOTAL 3.010.000 3.010.000 - - - COST

4.6 Conclusion  The following tables show that the development cost for the establishment of the CES Training Centre is 3.485.000 kunas. This includes the cost of the establishment of equipment and the initial training of the personnel.  The every year cost of the operation of the CES training Centre is approximately 3.010.000 kunas.  The planned amount for Training in existing CES budget is for 2008 3.221.000 kunas.

Thus, as the presented figures show only the initial establishment of the Training Centre will impose «a burden» to CES budget of 785.000 kunas. The every year operation cost of CES Training Centre (3.010.000 kunas) could be covered from CES budget sources. Therefore, the establishment of the Training Centre will not impose any extra costs to CES budget.

5. RISK ANALYSIS AND IMPLEMENTATION STRATEGY 5.1. Risk Analysis

RISK MANAGEMENT ANALYSIS

CATEGORY RISK PROBABI IMPACT RISK MANAGEMENT OF ACTIVITY LITY (High– STRATEGY (High– Medium-Low) Medium- Low) Insufficient  Present clearly and Political communicate thoroughly Commitment for the benefits of such an the Establishment Medium High activity to the Political and continuous Leadership operation of the  Launch a Training Centre communication campaign publicizing the merits and benefits of the activity

Insufficient  Present clearly and Administrative communicate thoroughly Commitment for the benefits of such an the Establishment Medium High activity to the and continuous Administrative operation of the Leadership Establishment Training Centre  Extensive of CES consultation with all Training stakeholders Centre Insufficient  Present clearly and funding for the communicate thoroughly Establishment the benefits of such an and continuous Medium High activity to CES operation of the Administrative Training Centre Leadership  Extensive consultation with all stakeholders for acquiring

Insufficient  Present clearly and participation of communicate thoroughly CES personnel to the benefits of such the activities Low High activity to CES Personnel conducted the  Extensive CES Training consultation with all Centre levels of CES personnel

It is quite evident from the above table that the establishment of the CES Training Centre depends on:  Strong and continuous commitment and support on the behalf of the Political Leadership for the establishment and operation of the Training Centre.  Strong and continuous commitment and support on the behalf of CES Administrative Leadership for the establishment and operation of the Training Centre.  The availability of sufficient funds especially for the establishment of the Training Facility.  Strong and continuous participation on the behalf of CES personnel to the training and professional development activities.

5.2. Implementation Strategy 5.2.1. Change of Financial Planning The financial needs of the Training Centre after its establishment are the following:

PERSONNEL COST ANNUAL COST (in kunas)

Salaries 2.196.00

TOTAL 2.196.000

OTHER COSTS ANNUAL COST (in kunas)

Variables 814.000

TOTAL 814.000

The view for the future urges for a change of Training Centre’s financial planning. This change is presented in the following diagram:

CHANGE OF FINANCIAL PLANNING

NOW FUTURE

MULTIPLE FUNDING STATE BUDGET

Added value services Training Needs Commitment for Improvement

C H A L L E N G E S

The sustainability strategy should contain:

 Identification of current and future training services.  Identification of future funding sources.  Implementation of activities.  Evaluation of the activities.  Future development:

The final Funding Framework is presented in the following diagram:

FRAMEWORK OF ANALYSIS OF THE ABC OFRAMEWORKSTRATEGIC 1rst LEVEL (Activity Based SUSTAINABILITY Costing) H O R PERSONNEL I

Z DEVELOPMENT O

O METHODS N

T B Quality Services A

E I COOPERATION S

S NETWORK WITH C Funding Policies U SOCIAL

New Funding Strategy

Multiple Funding E

T PARTNERS AND

S OTHER

AGENCIES AND

V INSTITUTIONS

New Added Value E Services

S New Added Value Services

6. ANNEXES 6.1. ANNEX 1 : Feasibility Study Questionnaire (to be used for the Consultation with Stakeholders).

FEASIBILITY STUDY QUESTIONNAIRE

September 2007

INTRODUCTION

The main specific objective of the project “Decentralization and Reorganisation of the Croatian Employment Service (CES)” is to assist the management of the CES in planning and implementing those changes that are required in order to improve the performance of their organization. To achieve that, the conduct of a Feasibility Study on the appropriateness of a National Training Centre and a competency-based programme is necessary in order to examine the possibility to extend the training capacity of CES in the field of vocational education.

However, the success of this attempt relies on your willingness to participate by filling in the following questionnaire.

All information included in this questionnaire is confidential and it will be solely used for the establishment of Critical Success Factors for key areas of service delivery and the identification of possible shortfalls.

Preservation of Confidentiality

Your answers to questions given below shall be confidential. No information will be kept that relates to your answers on this form. 33 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

PLEASE WRITE DOWN INFORMATION ABOUT YOUR CURRENT POSITION

CES LEVEL : ______

DEPARTMNET : ______

DIVISION/UNIT : ______

SECTION I : Personal Data

1. AGE 2. SEX  MALE  20-30  FEMALE  30-40  40-50  50-60  OVER 60

3. EDUCATION 4. FOREIGN LANGUAGES

 BASIC  ENGLISH  ADVANCED  FRENCH  TECHNOLOGICAL  ITALIAN  UNIVERSITY  GERMAN  GRADUATE (MASTER)  OTHER POST GRADUATE (PhD)  5. COMPUTER LITERACY  OTHER  BASIC

 INTERMEDIATE  ADVANCED

SECTION II : Current Work Data

1. YOUR PRESENT WORK PLACE IN WHICH CATEGORY IS INCLUDED? (CIRCLE ONLY ONE NUMBER)

CATEGORIZATION ACCORDING TO RESPONSIBILITIES

K1  Management of Senior Level and Leadership

K2  Professional

K3  Technical Assistance Work

K4  Other

K1 includes : Chief Executive Officers/General Directors, Directors of Departments (Directorates), Heads of Divisions, Sectors and Units

2. HOW MANY YEARS OF WORK EXPERIENCE DO YOU HAVE ?

IN CES IN OTHER IN THE PRIVATE MINISTRIES/SERVICES SECTOR

 UNDER  UNDER 5  UNDER 5 5  5-10  5-10  5-10  10-20  10-20  10-20

 OVER  OVER 20  OVER 20 20

SECTION III: Establishment of a National Training Centre and a certified competency –based programme

1. If a National Training Centre were created, what should be the scope of its work (note: several of the below suggested elements can be ticked)

The promotion of the asset of vocational training, focussing on :

Yes No

• enhancing  competencies 

• enhancing life-long   training

• …………………………   …

2. In your own words, which do you consider should be the 3 main objectives of such an National Training Centre?

3. In your opinion, which should be the main target groups of an Agency for Linguistic Diversity and Language Learning, if it were created?  Unemployed  Employers Professionals in the field of  vocational training  NGOs  The general public Other (please specify) :  ……………………………………………… …………………

4. All in all, do you think that the National Training Centre should be establish ?

 yes  no  I have no opinion

5. If no: why do you consider such a centre should not be established ?

……………………………………………………………………

6. If yes, how do you consider a future training centre could provide a significant contribution to the work of your own organisation ?

………………………………………………………………………………..

7. How do you consider that your own organization could provide input for the work of the Training Centre ?

………………………………………………………………………………..

8. Which would be the added value of such a training centre ?

………………………………………………………………………………….. 9. What are the conditions you think need to be fulfilled for the success of National Training Centre ?

… …………………………………………………………………………………

6.2. ANNEX II : List of Meetings and Documents

6.2.1. Employment policy guidelines (2005-2008)

In eight guidelines for higher employment in the European Union (EU), the Commission focuses on policies designed to achieve full employment, for example by improving inclusion of people at a disadvantage, greater investment in human resources, adaptation of education and training systems and more flexibility combined with job security.

Council Decision 2005/600/EC of 12 July 2005 on guidelines for the employment policies of the Member States.

The integrated guidelines for growth and jobs for the period 2005-2008 bring together, in a single, coherent and simplified text, the Broad Economy Policy Guidelines (BEPGs) and employment guidelines. They are the principal policy instrument for developing and implementing the Lisbon Strategy.

The employment guidelines are thus presented in an integrated policy instrument which covers both the macroeconomic and the microeconomic aspects of the European Union (EU), presents a clear strategic vision of the challenges facing Europe and enables the Union to channel Member States' efforts towards priority measures. Certain employment guidelines are to be implemented in line with the corresponding guidelines in other areas in order to mutually strengthen the different sectors of the economy.

Firstly, to attract more people into employment and modernise social protection systems, the Commission proposes to:

 Implement employment policies intended to achieve full employment, improve quality and productivity at work, and strengthen social and territorial cohesion (Integrated Guideline No 17). These policies should help to achieve an average employment rate for the European Union (EU) of 70% overall, at least 60% for women and 50% for older workers (55 to 64), and to reduce unemployment and inactivity. Member States should set national employment rate targets.

 Promote a new lifecycle approach to work (Integrated Guideline No 18) through: o renewed endeavors to build employment pathways for young people and reduce youth unemployment, as recommended in the European Youth Pact , o resolute action to increase female participation and reduce gender gaps in employment, unemployment and pay, o better reconciliation of work and private life and the provision of accessible and affordable childcare facilities and care for dependants, o support for working conditions conducive to active ageing, o modernization of social protection systems, including pensions and healthcare, to ensure their social adequacy, financial sustainability and 39 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

responsiveness to changing needs, so as to support participation in employment, remaining at work and longer working lives.

This guideline should be applied taking into account Guideline No 2 "To safeguard economic and fiscal sustainability".

 Ensure inclusive labor markets, enhance work attractiveness, and make work pay attractive for job-seekers, including disadvantaged people and the inactive (Integrated Guideline No 19) through: o active and preventive labor market measures, including early identification of needs, job search assistance, guidance and training as part of personalized action plans, and provision of necessary social services to support the inclusion of those furthest away from the labor market and contribute to the eradication of poverty, o ongoing review of the incentives and disincentives resulting from the tax and benefit systems, including the management and conditionality of benefits and a significant reduction of high marginal effective tax rates, notably for those with low incomes, whilst ensuring adequate levels of social protection, o development of new sources of jobs in services for individuals and businesses, notably at local level.

 Improve matching of labor market needs (Integrated Guideline No 20) through: o the modernization and strengthening of labor market institutions, especially employment services, also with a view to ensuring greater transparency of employment and training opportunities at national and European level, o removing obstacles to mobility for workers across Europe within the framework of the Treaties, o better anticipation of skill needs, labor market shortages and bottlenecks, o appropriate management of economic migration.

Secondly, to improve the adaptability of workers and enterprises and the flexibility of labor markets, the Commission proposes to:

 Promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners (Integrated Guideline No 21) through: o adaptation of employment legislation, reviewing where necessary the different contractual and working time arrangements, o addressing the issue of undeclared work, o better anticipation and positive management of change, including economic restructuring, for example changes linked to the opening of markets, so as to minimize their social costs and facilitate adaptation, o promotion and dissemination of innovative and adaptable forms of work organization, with a view to improving quality and productivity at work, including health and safety, o facilitating changes in occupational status, including training, self- employment, business creation and geographical mobility.

This guideline should be applied taking into account Guideline No 5 "To promote greater coherence between macroeconomic, structural and employment policies", in relation to macroeconomic policy.

 Ensure employment-friendly labour cost developments and wage-setting mechanisms (Integrated Guideline No 22) by: o encouraging social partners within their own areas of responsibility to set the right framework for wage bargaining in order to reflect productivity and labor market challenges at all relevant levels and to avoid gender pay gaps, o reviewing the impact on employment of non-wage labor costs and, where appropriate, adjusting their structure and level, especially to reduce the tax burden on the low-paid.

This guideline should be applied taking into account Guideline No 4 "To ensure that wage developments contribute to macroeconomic stability and growth", in relation to macroeconomic policy.

Thirdly, to invest more in human capital through better education and skills, the Commission proposes to:

 Expand and improve investment in human capital (Integrated Guideline No 23) through: o inclusive education and training policies and action to ensure significantly easier access to initial vocational, secondary and higher education, including apprenticeships and entrepreneurship training, o significantly reducing the number of early school leavers, o efficient lifelong learning strategies open to everyone in schools, businesses, public authorities and households according to European agreements, including appropriate incentives and cost-sharing mechanisms, with a view to ensuring lifelong participation in continuous and workplace training, especially for the low-skilled and older workers.

This guideline should be applied taking account of Guideline No 7 "To increase and improve investment in R&D, in particular by private business", in relation to microeconomic policy.

 Adapt education and training systems in response to new competence requirements (Integrated Guideline No 24) through: o raising and ensuring the attractiveness, openness and quality standards of education and training, broadening the supply of education and training opportunities, ensuring flexible learning pathways and increasing mobility possibilities for students and trainees, o facilitating and diversifying access for everyone to education, training and knowledge through the organization of working hours, family support services, career guidance services and, where appropriate, new forms of cost-sharing, o responding to new occupational needs, key competences and future skill requirements by improving the definition and transparency of qualifications, their effective recognition and validation of non-formal and informal learning. 41 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

Updates during the period up to 2008 should be strictly limited. The Commission is presenting the Integrated Guidelines as part of the mid-term review of the Lisbon Strategy.

Integrated guidelines for growth and jobs (2005-2008)

Macroeconomic guidelines (1) To secure economic stability for sustainable growth. (2) To safeguard economic and fiscal sustainability. (3) To promote a growth- and employment-orientated and efficient allocation of resources. (4) To ensure that wage developments contribute to economic stability. (5) To promote greater coherence between macroeconomic, structural and employment policies. (6) To contribute to a dynamic and well-functioning EMU.

Macroeconomic guidelines (7) To increase and improve investment in R&D, in particular by private business. (8) To facilitate all forms of innovation. (9) To facilitate the spread and effective use of ICT and build a fully inclusive information society. (10) To strengthen the competitive advantages of its industrial base. (11) To encourage the sustainable use of resources and strengthen environmental protection. (12) To extend and deepen the internal market. (13) To ensure open and competitive markets inside and outside Europe and to reap the benefits of globalisation. (14) To create a more competitive business environment. (15) To promote a more entrepreneurial culture and create a supportive environment for SMEs. (16) To improve European infrastructure.

Employment guidelines (17) Implement employment policies aiming at achieving full employment, improving quality and productivity at work, and strengthening social and territorial cohesion. (18) Promote a life-cycle approach to work. (19) Ensure inclusive labour markets, enhance work attractiveness, and make work pay for job-seekers, including disadvantaged people, and the inactive. (20) Improve matching of labour market needs. (21) Promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners. (22) Ensure employment-friendly labour cost developments and wage-setting mechanisms.

(23) Expand and improve investment in human capital. (24) Adapt education and training systems in response to new competence requirements.

REFERENCES

Deadline for Entry into force – Act transposition in Official Journal Date of expiry the Member States

Decision (EC) No25.04.2005 25.04.2005 L 205 of 12.07.05 2005/600

RELATED ACTS

Proposal for a Council Decision of 12 December 2006 on guidelines for the employment policies of the Member States [COM(2006) 815 - Not published in the Official Journal].

An assessment of the national reform programs (NRPs) by the Commission confirms that employment is increasing and unemployment is falling. However, productivity growth and quality of jobs remain below Europe's needs. The employment guidelines should be fully reviewed every three years. Until 2008 their updating should remain limited in order to ensure the degree of stability that is necessary for their effective implementation.

Council Decision (EC) No 2006/544/EC of 18 July 2006 on guidelines for the employment policies of the Member States [OJ L 215 of 5.8.2006].

In view of the essential role of employment policies in the framework of the Lisbon agenda, the Council urges the Member States to ensure the application of all these guidelines as part of their national employment programs. These guidelines have therefore not been amended by the Council.

6.2.2. ESF: European Social Fund

To redefine the framework and political priorities of the European Social Fund (ESF) for the period 2000-06 to support the European Employment Strategy as part of the Agenda 2000 reform of the Structural Funds and to guarantee consistency and complementarity in the measures taken to improve the workings of the labour market and to develop human resources.

Regulation (EC) No 1784/1999 of the European Parliament and of the Council of 12 July 1999 on the European Social Fund [Official Journal L 213 of 13.08.1999].

This Regulation falls within the overall framework set up under Council Regulation (EC) No 1260/1999 laying down general provisions on the Structural Funds . It contains specific provisions applicable to the ESF to the effect that the Fund must provide assistance throughout the European Union in line with the new Objectives 1 , 2 and 3 set up under the General Regulation.

The ESF's remit is to support measures which aim to prevent and combat unemployment, develop human resources and foster social integration in the labor market, so as to promote a high level of employment, equal opportunities for men and women, sustainable development and economic and social cohesion. In particular, it must assist the measures taken in line with the European strategy and guidelines on employment.

The ESF provides assistance for the three new objectives laid down in Regulation (EC) No 1260/99 concerning the general provisions on the Structural Funds.

The Regulation provides for five key policy areas for the ESF:

 development of active labor market policies to combat and prevent unemployment, to avoid long-term unemployment, to facilitate the reintegration of the long-term unemployed and to support integration into the labor market of young people and persons returning to work after a period of absence;  promotion of equal opportunities for all in terms of access to the labor market, with particular attention to persons at risk of social exclusion;  promotion and improvement of vocational training, education and counseling in the context of a lifelong learning policy;  promotion of a skilled, well-trained and flexible workforce, innovative and adaptable forms of work organization, and entrepreneurship;  specific measures to improve access and active participation of women in the labor market (career prospects, access to new job opportunities, setting up businesses, etc.).

Objective 3 is intended to provide "horizontal" assistance throughout the European Union, outside regions eligible under the new Objective 1.

In addition, the ESF encompasses three horizontal issues:

 promotion of local employment initiatives (including territorial pacts for employment);  the social dimension and employment in the information society;

 equal opportunities for men and women (as part of the drive for mainstreaming equal opportunities policies).

Eligible Activities

In general, three forms of assistance are eligible for ESF funding:

 assistance for individuals, which should represent the main form of aid, covering areas such as vocational training or education and careers guidance, etc.;  assistance for structures and systems to make support activities for individuals more effective (e.g. improving personal effectiveness);  accompanying measures (provision of services and equipment for the care of dependent persons, promotion of social skills training, and public awareness and information campaigns).

The ESF must provide assistance based on the national priorities set out in National Action Plans for employment which are drawn up by Member States. It also needs to take ex-ante evaluations into account.

Concentration of assistance

To make ESF measures more effective, assistance must be concentrated on a limited number of areas or themes and be directed towards the most important needs and the most effective operations, having due regard to ex ante evaluations and to covering relevant areas of policy.

The Regulation establishes small subsidy schemes under Objectives 1 and 3 with special provisions governing access for non-governmental organisations (NGOs) and local partners. It also provides for ESF financing of up to 100% of eligible costs for implementation of these schemes.

Community Initiatives, innovative measures and technical assistance

In accordance with the provisions laid down in the General Regulation governing the Structural Funds, the ESF helps to implement the Community initiative to combat all forms of discrimination and inequality in the labor market ( EQUAL ). Social and occupational integration of asylum seekers is also to be taken into account in the EQUAL initiative.

The ESF also finances preparation, follow-up and assessment activities in the Member States or at Community level needed to develop:

 Innovative measures and pilot projects on the labor market, employment and vocational training.  Studies and experience sharing, producing a multiplier effect. 45 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

 Technical assistance linked to the preparation, follow-up, assessment and vetting of ESF-funded operations.  Measures intended for employees of firms in two or more Member States under the Social Dialogue.  Information arrangements for the various partners involved the final beneficiaries and the general public.

Transitional provisions

The transitional regime laid down in the General Regulation on the Structural Funds applies to the Regulation on the ESF.

Reexamination

The Council will reexamine the Regulation by 31 December 2006 at the latest.

Repeal

Regulation (EEC) No 4255/88 will be repealed on 1 January 2000.

Supplementary information on structural policy reform is available from the site of the Directorate General for Employment and social affairs under European Social Fund .

DateFinal date for implementation Act of entry into force in the Member States

Regulation (EC) No 1784/1999 16.08.1999 -

RELATED ACTS

Proposal for a Regulation of the European Parliament and of the Council on the European Social Fund [com(2004) 493 final].

Proposal for a Council Regulation laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund [COM(2004) 492 final].

6.3. Vocational Education and Training (VET) Systems

6.4. Training Needs Assessment Review 6.4.1. Overview of TNA key findings

Type of work Key skills and Most important Biggest Trainings Future trainings implemented knowledge success factors problems concluded needs based on during working CES managers time proposals Operative work: 1. 1. 1. Work overload 1. Strategic - communication 40-100% - communication quality human - insufficient planning skills - organisation resources (expert, human resources - business plan - delegating - expertise motivated) - low level of - vision - negotiating - tendency to changes knowledge - goals - presentation - team work - no motivation - SWOT/PEST skills - IT - monitoring - conflict solving - motivation - action plans - time - planning management - analytic skills - change management - caseload management - human resource management - financial management - project management Management and 2. 2. 2. Organisation 2. Management leadership: 20% - management - interrelation - nondependent - communication - decision making - communication management - motivation - problem solving - marketing - limited - delegation financial - presentation resources skills - slow and inert - chairing system meetings - stress - team work Cooperation with 3. 3. 3. institutions - responsibility - management Communication outside CES: 10- - foreign languages (setting goals, - conflict solving 25% - financial decision making, - reporting management organisation, - one-way - human resources planning, communication management monitoring) Marketing and 4. 4. Not promotion of - marketing understanding of CES: 10% - promotion the working environment for the significance of HR Other working 5. Absence of bodies: 5-10% initiative and entrepreneurship Education: 0- 10% New innovative projects: 0%

6.4.2 Proposed themes for trainings by the consultants

Area Missing skills/knowledge based Comments on TNA and individual interviews Analytical skills - assessed as sufficient Key managerial skills - People management (guidance of people team, negotiation, empowerment, delegation) - Leadership (vision, influence, credibility) - Time management ( e.g. good meeting) Strategic Planning - setting goals - operational planning - prioritisation Project management - project appraisal - monitoring/evaluation - progress reporting - setting up and applying - key performance indicators Financial management - preparation of financial proposals - procurement and international bidding procedures

HRM - motivation and remuneration - already in process within this CARDS project Change management - already in process within this CARDS project Caseload management - already in process within this CARDS project Expert knowledge - EU employment policy - organisation of similar institutions in EU countries - EU legal framework IT skills Excel Foreign languages English language

6.5. CES LEGAL OPERATING FRAMEWORK

Croatian Employment System is the public institution, based on the Law on Mediation of Employment and Rights in the Time of Unemployment (Official Gazette no. 32/02, 86/02). CES operates independently according to legislative and other regulations. The basic legislative regulations for CES are:

 Law on Mediation of Employment and Rights in the Time of Unemployment (OG no. 32/02, 86/02, 114/03, 151/03).

 Statute of the Croatian Employment Service (OG no. 86/03, 3/06).

 Act on Active Job Search and Availability for Work (OG no. 96/02).

 Act on the Manner of Application and Registration of Croatian Employment Service (OG no. 57/06).

 Act on Performing Activities Related to Employment outside Croatian Employment Service (OG no. 96/02).

Legislative framework for financing employment activities is composed of:

 Act on Job Placement and Unemployment Insurance (OG no. 32/02, 86/02, 114/03, 151/03).

 Law on the Budget (OG no. 96/03).

 Law on Taxes for Obligatory Insurances (OG no. 147/02, 177/04).

Legal working status of CES employees is based on:

 Law on Work – cleaned text (OG no. 137/04).

 Regulation on Internal Constitution and Systematisation of Working Posts with Coefficients of Work.

CES is the public institution owned by the Republic of Croatia and managed by the Management Board. The Management Board consists of 9 members appointed by the Government of the Republic of Croatia. Out of those nine members, 3 members are proposed by the Ministry in jurisdiction over work, and 6 members, 3 of whom are representatives of the union and 3 of whom are representatives of employers, are proposed by Economic-Social Council. The head of CES is the General Director, appointed by the Government of the Republic of Croatia at the proposal of the Minister in jurisdiction over work, based on the undertaken public announcement. CES has a unique administrative service, divided to central office and 22 regional offices with 94 local offices. CES administrative service was organised for the purpose of undisturbed, rational and successful performance of the CES activities.

6.6. CES PLANNING OPERATING FRAMEWORK

National Employment Action Plan 2005 -2008 National Action Employment Action Plan for the period from 2005 to 2008 (NEAP) was adopted by the Government of the Republic of Croatia at the session held on December 2, 2004. NEAP is based on the guidelines and recommendations of the European Employment Strategy. NEAP goals are: improved efficiency of labour market in the Republic of Croatia, increased employment and decreased unemployment, as well as accession to Croatia's association to the EU processes. NEAP is the base for consistent employment strategy of the Republic of Croatia and it presents the framework for adaptation of annual plans, as a starting point for labour market reform.

Annual Employment Incentives Plan According to the NEAP, the Government of the Republic of Croatia passes the Annual Employment Incentives Plan (AEIP). The first AEIP was adopted for the year 2006.

On the basis of the AEIP, CES and other responsible legal entities implement employment stimulation measures with a goal to enhance employability, develop entrepreneurship, provide incentives for adaptability of employers and workers to the labour market conditions through continuous vocational training and acquiring knowledge, as well as to provide incentives for equal employment conditions of women and men and other groups in danger of being socially excluded.

AEIP implementation measures are aimed at: development of entrepreneurship by means of co-financing expenses for the establishment of new cooperatives, opening of new trades, subvention on interest for entrepreneurial credits and self-employment, crediting entrepreneurship in tourism, education of long time unemployed persons, persons with lower education and young persons who ended their schooling in order to enable them to achieve additional knowledge and skills required at the labour market, thus increasing their employability and coordinating offer and demand at the labour market. In the development of implementation measure special attention has been given to the promotion of integrity and the fight against discrimination of persons being in the unfavourable position at the labour market by means of measures such as co-financing of employment of disabled persons, persons with difficulties to get employment, unemployed single parents of underaged children, unemployed Croatian veterans, etc. and their inclusion into public programmes implemented by local self-government units, as well as the implementation of measures prescribed by the National Programme for the Romanies. In the scope of the National Programme for the Romanies the measures related to preparation of employment, co-financing of employment and self-employment of the unemployed Romanies have been verified. The measures are implemented by:

 Ministry of Economy, Labour and Entrepreneurship (MELE);

 Ministry of Family, Veterans' Affairs and Intergenerational Solidarity (MFVAIS);

 Ministry of Sea, Tourism, Transport and Development (MSTTD);

 Ministry of Health and Social Service (MHSS);

 Ministry of Science, Education and Sports (MSES);

 Croatian Employment Service (CES).

Reference to AEIP for the year 2006 53 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

According to the Annual Employment Incentives Plan for the year 2006 it was planned to cover 8.817 persons by the measures which are in the domain of Croatian Employment Service in the period from March 23 to December 31, 2006. The implemented measures covered 4.869 persons which are recorded as unemployed, out of whom 3.996 persons are employed and 873 persons are included into vocational training, making 55,2% of the planned result. 150.000.000 kunas were made available for implementing AEIP measures for the year 2006 which are in the domain of CES, out of which 93.696.550,77 kunas were spent on employment and education of 4.869 persons.

Analysis of correlation of NEAP and AEIP measures The analysis of correlation of the measures of National Employment Action Plan for the period from 2005 to 2008 (NEAP) and Annual Employment Incentives Plan for the year 2006 (AEIP) show the following conclusions:

 NEAP is very ambitious, consisting of more than 75 recognised measures;

 In the scope of AEIP, one third of AEAP measures were implemented;

 In the scope of AEIP, 21 measures not planned by NEAP were implemented, which presents an added value in relation to NEAP.

AEIP 2007 measures in the domain of CES Comprehensive measures form the Annual Employment Incentives Plan for the year 2007:

 Active and preventive measures for unemployed and non-active persons (Guideline 1);

 Opening of new working posts and the development of entrepreneurship (Guideline 2);

 Stimulating changes and promotion of adaptability and mobility at the labour market (Guideline 3);

 Promotion of human potential development and lifelong learning ( Guideline 4);

 Promotion of integrity and the fight against discrimination of underprivileged persons at the labour market ( Guideline 7);

 Illegal work ( Guideline 9); 54 Feasibility Study on the appropriateness of a Training Center and a certified competency-based program – DIADIKASIA Business Consultants S.A. – ABU Consult GmbH – Institute for International Relations (IMO)

 Regional differences ( Guideline 10).

Measures form the AEIP for the year 2007 in the domain of CES

 Support to employment

Measure 1 – Employment co-financing for young persons and people with no working experience (Guideline 1); Measure 2 - Employment co-financing for persons who have been unemployed for a long time (Guideline 1); Measure 3 - Employment co-financing for women over 45 and men over 50 years of age (Guideline 1); Measure 4 - Employment co-financing for special groups of unemployed persons (Guideline 7);

 Support to vocational training

Measure 5 – Vocational training co-financing for the known employer (Guideline 3)

 Vocational training and employment aiming at increased employability of unemployed persons Measure 6 – Vocational training financing for unknown employer (Guideline 4) Measure 7 – Public works (Guideline 7)

 Measures from National Programme for the Romanies

Measure Z – The Romanies employment subvention lasting for 24 months (Guideline 7) Measure O/N - Vocational training for unknown employer (Guideline 7) Measure O/P - Vocational training for the known employer (Guideline 7) Measure J – Public works (The Romanies for the Romanies and the Romanies for the local community) (Guideline 7)

Other plans Operational Plan for the implementation of e-Hrvatska 2007 Programme Operational Plan for the implementation of the Programme for the year 2007 states Employment as one of the basic services for citizens through the Project e–Public

Administration, which is divided into three services: application to the CES records, submitting requests for achievement of benefits in the time of unemployment, search for free jobs. e-Hrvatska 2007 Programme is based on six goals: - Widespread connection of the public administration; - Easy access to public sector services to all; - Electronic system of public procurement; - Access to Internet enabling the insight into public administration; - Electronic use of tourist and cultural services; - Operational framework for Pan European services.