CAPITULO II MARCO TEÓRICO
2.1 La lengua materna como instrumento de interacción social
Implementation plans of the three selected alternatives are elaborated and evaluation of influence of these alternatives is performed.
Implementation plans of the alternatives
The institution responsible for implementation of the Research Maintenance Alternative is LM, which upon acceptance of the research results ensure further maintenance of the Research. Other institutions involved (ministries, subordination institutions, etc.) in medium-term and long-term labor market supply and demand forecasting are not actively
participating in implementation of the alternative. Implementation of the alternative requires the following activities:
• Ensure financing for research maintenance – annually, when creating the budget of LM for the upcoming year, the costs are included, which are necessary for implementation of the alternative;
• Preparation of purchase documentation – annually, the LM must prepare purchase documentation, which is necessary for involvement of external service providers; • Involving external service provider – annually, LM must ensure involvement of an
external service provider according to the requirements of legislation regulation purchases, in order to involve researchers, who would then update the forecasts;
• Monitor research performance – during the time period, when the involved service provider is performing the research, LM must ensure monitoring of the research performance;
• Distribution of the final results – LM delivers the updated forecasts to other institutions, which are related to labor market supply and demand;
• Distribution of research data – in order to ensure use of the prepared forecasts in decision making, LM must ensure data accessibility to all linked institutions not only upon update of the forecasts, but at any time when the institutions require it;
• Store the research data – in order to maintaining the IT solution and ensure data accessibility for researches related to research updating, LM must ensure that the research data are stored.
EM is the responsible institution for implementation of Alternative of Improvement of the Existing System, which is scheduled to be entrusted with the labor market forecasting function and thus take over the labor market research results from LM. Thus, in implementation plan of the alternative all of the above mentioned activities are to be included, upon change of the responsible institution, and additionally – the following activities are to be performed:
• To take over the labor market research results – upon the end of the research, LM delivers the labor market research results, including results of this research to EM; • To strengthen EM capacity – a new department is established at EM, wherein the
head of the department, assistant thereof, and five employees would be employed. In order to ensure that, amendments have already been made to the statutes of EM, providing for the new functions, however the regulations of the department are additionally necessary to be prepared and amendments must be implemented to the EM operational strategy, as well as ensure work places of the new department, including arrangement of purchases;
• Creation of management/consultative council – in order to ensure coordinated work between the institutions, which are related to labor market supply and demand, upon initiative of EM, the management/consultative council would be created, which would include representatives of the main involved ministries (LM, IZM, EM, RAPLM, VM, KM, ZM) and subordination institutions thereof, as well as representatives of the involved parties (NVA, Adult education and development agency (PIAA), CSP, VRAA, etc., for instance, NGO representatives). For implementation of the activity, it is necessary to prepare a MK decree about establishment of the council and elaborate the statutes of the council;
• Elaboration and implementation of the optimum cooperation mechanism – according to the created consultative council and statutes thereof, the cooperation mechanism is completed and implemented;
• Participation in the consultative council of the labor market supply and demand system – involvement of IZM, LM, RAPLM, VM, KM, ZM, NVA, AIP, PIC, PIAA, and others in work group of labor force supply and demand system evaluation, elaboration of proposals for improvement of the system, participation in decision making, nominating the responsible employee;
• Perform labor market development analysis and elaborate proposals in matters of economic policy.
EM is also the responsible institution in implementation of the Alternative of Establishing an Agency and Implementation of IT Solution. As this alternative is more extensive than the previous, in framework thereof it is necessary to perform the following activities:
• Establish the Research Institute under subordination of EM – a new agency is established, where 15 individuals are employed. In order to implement it, the following regulatory normative acts are elaborated: MK decree on establishment of an agency, MK regulations on agency statutes, operational strategy of the agency, amendments are made to the EM operational strategy and to the statutes of EM. It is necessary to ensure work places of the new agency, including arrangement of purchases;
• Consolidate the capacity of other institutions involved – it is necessary to recruit additional employees at IZM (two employees), LM, NVA, PIC, Center of quality evaluation of the higher education, RAPLM, VRAA, in order to ensure participation in cooperation, information provision, forecasting, etc.;
• Elaboration and implementation of data gathering and processing scheme – EM and the Research Institute defines the information sources and cooperation between the Research Institute and the institutions, which are the data owners/keepers, as well as defines the data processing scheme at the Research Institute and in cooperation with the Consultative Council.
Financial analysis (cash flow) of the alternatives
The financial analysis is based on the following general assumptions:
• The costs of creation of one level new work place are equal in all ministries or agencies;
• The costs of creation of a work place are calculated, based on calculations on work place creation costs prepared by EM, and they are calculated only for creation of full time work place – in case of additional part time load, it is assumed that the alternative maintenance costs are formed (i.e., an existing employee is involved in implementation of the alternative); when forecasting a creation of a new work place without establishing a new department or agency, it is assumed that the new employee conforms to the level of senior referent;
• The sum of creation of information system is defined according to the calculations of the IT specialists. As the IT specialists of the research have defined the limits of the sums of costs, the average parameters are used in the cost calculations of the alternatives;
• Costs of annual researches are derived from the initial research costs according to the opinions of the researchers involved in the research about the necessary work extent in case of a repeated research; all of the necessary survey data are obtained from CSP, NVA, and IZM;
• Costs of amendments to the statutes, part time loads, etc. are considered as the alternative costs with the cash flow, which is already included in the state budget, therefore are not considered in financial analysis of these alternatives, and therefore are referable to the economic analysis, not the financial analysis, because in the financial analysis, according to the guidelines of European Community about analysis of investment projects, only investment costs and maintenance expenses are to be included in the costs of the project, however the expenses, which are covered by other participant groups, are displayed in the economic analysis (“Evaluation of policy influence in policy making system” („Politikas ietekmes vērtēšana politikas veidošanas sistēmā”), State Chancellery, p. 27);
• The investment year or the “0” year (base year) provisionally conform to year 2008; a part of the activities could be executed already during the second half of year 2007, however due to the fact that financing is not allocated for this, in the calculations it is scheduled to occur in year 2008;
Table 19. Macroeconomic parameters forecasted by the Ministry of Finance 2008-2011
Parameters 2008 2009 2010 2011
Consumer price inflation, annual average, % 4,30% 3,40% 2,70% 2,50% Salary, increase in comparative prices, % 6,40% 6,90% 7,10% 6,90%
• In the calculations of financial flow, applied is the consumer price inflation and the salary growth forecasted by the Ministry of Finance (See Table 19);
• The remaining value of investments at the end of the period – 0 LVL; • The selected analysis time period – 15 years;
• Applied discount rate – 5%, according to the Methodological regulations of the General Directorate of the European Regional Policy on performance of cost and benefit analysis (General Directorate of the Regional Policy of European Commission, 2006: 7).
Simultaneously with the general assumptions, all of the necessary assumptions were made in case of each alternative.
Within framework of the Research Maintenance Alternative:
• Two new employment positions are created at LM (investment costs 3 254 LVL during the year 0, maintenance costs 20 586 LVL in year 0), as well as additional ½ time load volume is formed for the IT specialist of IZM, RAPLM, and LM; the costs in relation to creating the new employment positions are based on detailed calculations about creation and maintenance of work places, which has been elaborated by EM in prices of 2006/2007 and which are increased according to the inflation quotient, i.e.:
− The material costs for arrangement of a new work place – costs for purchase of a new office chair, visitor's chair, calculator, equipment of office premises, table lamps, purchase of a telephone for each employee;
− Capital costs for arrangement of a new work place – costs of computer purchase, costs of office furniture, i.e., desk and file cabinet purchase; investments into purchase of computers are repeated every 5 years, considering the wear of these devices;
− Salary – 490 LVL monthly for an officer of senior referent level, including a bonus of one monthly salary;
− State social security expenses in amount of 24.09%;
− Costs of business trips – 1000 LVL annually per one employee;
− Payment for services included payment for telecommunications (LVL 35 monthly), internet, NAIS database, and payment for other connections (LVL 20 monthly), costs of mailing (35 LVL annually);
− The material costs include also costs for office supplies (5 LVL monthly) and administrative expenses (50 LVL monthly).
Table 20. Assumptions of creation and maintenance costs of new places of employment
Arrangement of a new work place (at all institutions, except the Research Institute)
Costs in year 0, LVL Investment costs 1 627 Material costs 198 Office chairs 47 Visitors’ chairs 31 Calculators 5
Equipment of the office premises 52
Table lamps 21
Telephone sets 42
Capital expenses 1 429
Computers with software 991
Office furniture 438
Desk 250
File cabinet 188
Maintenance costs 10 293
Salary: 6 778
Costs of state social insurance 1 633
Costs of business trips 1 043
Payments for services 725
Payment for telecommunications 438
Internet, NAIS database, and other connections 250
Mailing expenses 37
Material costs 115
Office supplies 63
Administrative costs 52
The mentioned costs are displayed in Table 20, considering inflation.
• Investments into computer system are related only to purchase of the server necessary for data storage and alternative costs for salary of IT specialist (investment costs 4 250 LVL in year 0);
• For updating the forecasts, the costs of the necessary order are evaluated at 50 000 LVL in year 0. The assumption is based on the expense item analyses performed within framework of the research and on the rearcher opinion on the necessary extent of work in case of repeated data analysis.
Table 21. Financial calculations of research maintenance alternative
Year of
investment Years of operations Position
0 1 2 3 4 5 6 7
Investment costs: 7504 0 0 0 0 2336 0 0
Arrangement of new employment
positions at LM 3254 0 0 0 0 2336 0 0
IT solution costs 4250
Maintenance costs: 70586 75325 80501 85880 91626 97763 104319 111323
New work loads at LM 20586 21875 23257 24685 26208 27832 29563 31408
Order costs 50000 53450 57245 61195 65417 69931 74756 79915
IT solution costs 0 0 0 0 0 0 0 0
Income: 0 0 0 0 0 0 0 0
Outgoing cash flow: 78090 75325 80501 85880 91626 100099 104319 111323
Incoming cash flow: 0 0 0 0 0 0 0 0
Cash flow: -78090 -75325 -80501 -85880 -91626 -100099 -104319 -111323 Consolidated cash flow: -78090 -153415 -233916 -319797 -411422 -511521 -615841 -727163
Years of operations Position
8 9 10 11 12 13 14 15
Investment costs: 0 0 2687 0 0 0 0 0
Arrangement of new employment
positions at LM 0 0 2687 0 0 0 0 0
IT solution costs
Maintenance costs: 118805 126799 135339 144463 154211 164626 175755 187645
New work loads at LM 33377 35475 37714 40102 42649 45367 48267 51360
Order costs 85429 91323 97624 104361 111561 119259 127488 136285
IT solution costs 0 0 0 0 0 0 0 0
Income: 0 0 0 0 0 0 0 0
Outgoing cash flow: 118805 126799 138026 144463 154211 164626 175755 187645
Incoming cash flow: 0 0 0 0 0 0 0 0
Cash flow: -118805 -126799 -138026 -144463 -154211 -164626 -175755 -187645 Consolidated cash flow: -845969 -972767 -1110793 -1255255 -1409466 -1574093 -1749847 -1937492
Table 22. Financial calculations of the alternative of improvement of the existing system
Year of
investment Years of operations Position
0 1 2 3 4 5 6 7
Investment costs: 15640 0 0 0 0 8177 0 0
Arrangement of new employment
positions at EM 11390 0 0 0 0 8177 0 0
IT solution costs 4250
Maintenance costs: 126342 134599 143556 152845 162760 173344 184642 196702
New work loads at EM 76342 81149 86311 91650 97343 103413 109885 116788
Order costs 50000 53450 57245 61195 65417 69931 74756 79915
IT solution costs
Income: 0 0 0 0 0 0 0 0
Outgoing cash flow: 141982 134599 143556 152845 162760 181521 184642 196702
Incoming cash flow: 0 0 0 0 0 0 0 0
Cash flow: -141982 -134599 -143556 -152845 -162760 -181521 -184642 -196702 Consolidated cash flow: -141982 -276581 -420136 -572981 -735742 -917263 -1101905 -1298607
Years of operations Position
8 9 10 11 12 13 14 15
Investment costs: 0 0 9404 0 0 0 0 0
Arrangement of new employment
positions at EM 0 0 9404 0 0 0 0 0
IT solution costs
Maintenance costs: 209578 223325 238002 253674 270409 288279 307362 327742
New work loads at EM 124149 132002 140378 149314 158847 169019 179874 191457
Order costs 85429 91323 97624 104361 111561 119259 127488 136285
IT solution costs
Income: 0 0 0 0 0 0 0 0
Outgoing cash flow: 209578 223325 247406 253674 270409 288279 307362 327742
Incoming cash flow: 0 0 0 0 0 0 0 0
Cash flow: -209578 -223325 -247406 -253674 -270409 -288279 -307362 -327742 Consolidated cash flow: -1508185 -1731510 -1978916 -2232590 -2502999 -2791278 -3098640 -3426381
To sum up, the costs of investments of research maintenance alternative in year 0 constitutes 7 504 LVL, however the maintenance costs in year 0 add up to 70 586 LVL (See Table 21). Due to the fact that the potential income is not identified in the implementation of the alternative, both – the cash flow and the FNPV are negative. The FNPV calculated with at 5% discount rate conforms to – 1 229 861 LVL.
The necessary additional assumptions for financial analysis of System Improvement Alternative: • 7 new employment positions are created at EM (head of the department, assistant
director, and 5 senior referents), as well as additional ½ load at LM, NVA, IZM, AIP, PIAA, RAPLM, VRAA. The costs for arrangement and maintenance of work places of the senior referents are analogues to the previously described expenses, when forming new work places at LM, however the head of the department and its assistant have higher salary – 640 LVL monthly salary for the head of the department, and 590 LVL monthly to the assistant of the head of the department; the costs for half times are calculated as one half of the costs in cases of senior referents and these expenses are considered as alternative costs;
• Investments for development of computer system remain the same as for the previous alternative – only for purchase of a server necessary for data storage; also the research update is entrusted to an external service provider and the necessary research data are obtained from CSP, NVA, and IZM for a monetary consideration, which is analogous to the research maintenance alternative.
Hence, the expense and income sections of this alternative provide investment costs of 15 640 LVL in year 0, which adds up of arrangement of the new employment positions at EM (11 390 LVL in year 0) and costs of purchase of the IT solution necessary for data storage (4250 LVL in year 0), and maintenance costs (126 342 LVL in year 0), which includes the costs of new work places (76 342 LVL in year 0) and the order costs (50 000 LVL in year 0) (See Table 22). In implementation of this alternative, the potential income is also not identified, and the FNPV calculated with the five percent discount rate conforms to – 2 179 498 LVL.
In case of Alternative of Establishing an Agency and Implementation of IT Solution: • Similar to the previous alternative, 7 new employment positions are created at EM,
however in addition to that 15 new employment positions are created at the newly established Research Institute, 2 new employment positions at IZM, and one new employment positions in each of the following: LM, NVA, IZM, PIC, Center of quality evaluation of higher education (AIKNC), RAPLM, VRAA, as well as additional ½ work load at AIP, PIAA; the costs for establishment of the new department and separate employment positions are explained in detail in descriptions of the previous alternatives, therefore a more detailed explanation is necessary for the 15 new employment positions at the Research Institute. It is assumed, that the following employees will be required: director of the institute, 4 administrative workers, and 10 researchers; the salary is defined for each level: director of the institute – 1250 LVL monthly, administrative workers – 750 LVL monthly, and the researchers – 1025 LVL monthly.
Table 23. Costs of formation and maintenance of new places of employment at the Research Institute
Arrangement of a new employment position
(at the Research Institute) Expenses in year 0, LVL Investment expenses 33 220
Material costs 3 285
Office chairs 704
Visitors’ chairs 469
Calculators 78
Equipment of office premises 782
Table lamps 313
Telephone sets 626
Arrangement of a new employment position (at the Research Institute)
Expenses in year 0, LVL
Capital expenses 29 934
Computers with software 17 210
Server with software 2 608
Office furniture 6 258
Desks 3 755
File cabinets 2 503
Photocopiers 1 877
Printers 1 565
Scanner, fax, etc. 417
Maintenance costs 327 566
Salary for the director 17 290
Salary for the administrative workers 41 496
Salary for the researchers 141 778
Costs of state social insurance 48 316
Costs of business trips 15 960
Payments for services 29 287
Rent of the premises 11 264
Utilities 6 571
Payment for telecommunications 6 571
Payment for mobile communications 3 379 Internet, NAIS database, and other connections 250
Mailing expenses 1 252
Books and press 1 043
Payments for legal services 32 333
Material costs 63
Office supplies 63
Majority of the remaining costs is analogous to calculations of other employment positions, however in case of the institute, additional scheduled are costs for premises with total floor-space of 150 m2 (6 LVL per m2 monthly rent, utilities – 250 LVL per month), purchase and maintenance costs of cellular telephones (6 cellular phones, 50 LVL each, current costs – 45 LVL monthly per mobile phone), other capital investments are also scheduled – a server with software (2500 LVL), 2 photocopiers (900 LVL each), 10 printers (150 LVL each), scanner and other devices (400 LVL), costs for books and press (1000 LVL annually), as well as for legal services (31 000 LVL annually). The mentioned costs, considering inflation, are displayed in Table 23.
• Within framework of this alternative, investments are scheduled in improvement of IT system and they include costs of elaboration of the information system, technological resources, and software, as well as maintenance costs. The average costs are included in the financial calculations (See Table 24);
Table 24. Cost assumptions of IT system improvement
Creation of information system Costs (min.), LVL Costs (max), LVL Average costs, LVL
Input data sub-system 25 360
Project management 2 400 2 600 2 500 Analysis/designing 6 560 7 360 6 960 Elaboration 7 980 8 820 8 400 Testing 3 600 3 960 3 780 Documentation 960 1 080 1 020 Training 840 960 900 Implementation 1 680 1 920 1 800
Creation of information system Costs (min.), LVL Costs (max), LVL Average costs, LVL Calculations sub-system 33 100 Project management 3 000 3 600 3 300 Analysis/designing 8 160 9 760 8 960 Elaboration 10 080 12 040 11 060 Testing 4 560 5 520 5 040 Documentation 1 320 1 560 1 440 Training 960 1 200 1 080 Implementation 2 040 2 400 2 220 Analytical sub-system 27 110 Project management 2 400 2 800 2 600 Analysis/designing 6 880 7 840 7 360 Elaboration 8 540 9 800 9 170 Testing 3 840 4 440 4 140 Documentation 1 080 1 200 1 140 Training 840 960 900 Implementation 1 680 1 920 1 800 Administering sub-system 11 350 Project management 1 000 1 200 1 100 Analysis/designing 2 880 3 200 3 040 Elaboration 3 640 4 060 3 850 Testing 1 680 1 800 1 740 Documentation 480 480 480 Training 360 360 Implementation 720 840 780 Total: 96 920 Technological resources 11 000
Database server computer 2 500 6 000 4 250
Application/web server computer 2 500 6 000 4 250
Backup copying device 1 000 4 000 2 500
Software 16 250
Database management system (free code
software or paid product) 0 10 000 5 000
Application server software (free code
software or paid product) 0 10 000 5 000
Modeling software (for instance,
Powersim) 2 500 10 000 6 250
Total costs (LVL without VAT): 124 170
Maintenance
Maintenance of technical infrastructure (IT
system administrator) 4 224 6 408 5 316
Maintenance of information systems
(Elaborator) 9 016 15 552 12 284
Annual maintenance costs
• Updating of the research is performed by the Research Institute and the necessary survey data are obtained from CSP, NVA, and IZM, thus additional research order costs are not scheduled in this alternative.
To sum up, the income and expense parts of this alternative are related to the following costs: investment costs (181 796 LVL in year 0), which are made of arrangement of new employment positions at the Ministry of Economy (11 390 LVL in year 0), arrangement of new employment positions at the Research Institute (33 220 in year 0), and in other institutions (13 017 LVL in year 0) and purchase costs of the necessary IT solution for data storage (124 170 LVL in year 0); maintenance costs (503 852 LVL in year 0) include costs of the new employment positions at EM (76 342 LVL in year 0), at the Research Institute (327 566 LVL in year 0), and in other institutions (82 344 LVL in year 0), as well as the maintenance costs of IT solution (17 600 LVL in year 0) (See Table 25).
In implementation of this alternative, potential income could be obtained, however the extent thereof is relatively insignificant, therefore the income position is not considered in the cash flow analysis. Thus, both – the cash flow and the FNPV are negative and conform to – 8 647 154 LVL.
To compare the selected alternatives according to the results of financial analysis (see Table 26): • Implementation of the research maintenance alternative is connected with the lowest
expenses, even though annual expenses are necessary for updating of the ordered research. Only several employment positions are created and it is not associated with significant contributions into development of the IT system,