Employment and Poverty in Mongolia Summary (2024)

MONGOLIA HUMAN DEVELOPMENT REPORT 2007

HUMAN DEVELOPMENT REPORT MONGOLIA 2007 EMPLOYMENT AND POVERTY IN MONGOLIA SUMMARY

Employment and Poverty in Mongolia

Government International Swedish International of Mongolia Labour Development Cooperation Organization Agency

Printed in Mongolia This report does not necessary refl ect the views of the United Nations Development Programme or the Government of Mongolia. It may be reproduced and circulated for non-profi t purposes.

Copyright © 2007

ISBN 978-99929-1-248-0

United Nations Development Programme UN House 12 United Nations Street P.O.Box-1009 Ulaanbaatar-46, Mongolia

E-mail: [emailprotected] Internet: http://www.un-mongolia.mn/undp ABBREVIATIONS

ADB Asian Development Bank AM Academy of Management CHRD Center for Human Rights and Development CMTU Confederation of Mongolian Trade Unions Organizations CPI Consumer Price Index CPS Center for Policy Studies CWR Child Work Rate EDEP Equally Distributed Equivalent Percentage FDI Foreign Direct Investment GDI Gender-Related Development Index GDP Gross Domestic Product GEM Gender Empowerment Measure GTZ German Technical Cooperation Agency HDI Human Development Index HDR Human Development Report HPI Human Poverty Index ICLS International Conferences of Labour Statisticians ILO International Labour Organization IPEC International Programme on the Elimination of Child Labour IT Information and Technology LSMS Living Standards Measurement Survey MCC Mongolian Chamber of Commerce MDG Millennium Development Goal MECS Ministry of Education, Culture and Science MIT Ministry of Industry and Trade MF Ministry of Finance MH Ministry of Health MONEF Mongolian Employers’ Federation MonFemNet National Network of Mongolian Women’s NGOs MSWL Ministry of Social Welfare and Labour NFE Non-formal Education NGO Non-Governmental Organization NRC National Rehabilitation Centre NSO National Statistical Offi ce NUM National University of Mongolia PLSA Participatory Living Standards Assessment PPP Purchasing Power Parity PREF Poverty Research and Employment Facilitation project PTRC Population Teaching and Research Center RHS Reproductive Health Survey SES School of Economic Studies SIDA Swedish International Development Cooperation Agency SME Small and Medium Sized Enterprises SSIGO State Social Insurance General Offi ce SWTS School to Work Transition Survey TERA Transportation and Economic Research Associates UNDP United Nations Development Programme UNFPA United Nations Population Fund UNESCO United Nations Education Science and Culture Organization UNICEF United Nations Children’s Fund UNIFEM United Nations Development Fund for Women USA United States of America VET Vocational Education Training WB World Bank WHO World Health Organization

MHDR 2007 3 PREPARATION TEAM

Authors of the Background Papers: Coordination and Support Team Dr. Shi.Batbayar, Head, Professional Dr. B.Bat, Dr. D.Chimgee, B. Erdene- Board of Social Welfare Association suvd, B.Lkhagvasuren, D.Nyamaa, Dr. N.Batnasan, Academic Secretary, B.Ganzorig, School of Economic Stud- School of Economic Studies, National ies, National University of Mongolia University of Mongolia Dr. Ya.Dolgorjav, Professor, Mongolian Ministry of Social Welfare and Labour Academy of Management; Advisor to the President of Mongolia S.Chinzorig, Vice-Minister for Social Dr. Ch.Khashchuluun, Director, School Welfare and Labour of Economic Studies, National Univer- sity of Mongolia UNDP Programme Support Mr. L.Myagmarjav, Managing Director, Shoko Noda, Deputy Resident Repre- Mongolian Consulting Service “Coca sentative Cola” Co.,Ltd D.Nergui, Assistant Resident Repre- Dr. N.Sodnomdorj, Professor, Institute sentative of International Studies of Mongolia; J.Doljinsuren, Economist G.Uyanga, Former-Economist Editors: L.Munkhjargal, Programme Assistant Dr. N.Batnasan, Academic Secretary, School of Economic Studies, National ILO University of Mongolia ILO Offi ce in Beijing and Bangkok Mr. Bill Bikales, Senior Economist, UNDP China/Mongolia (based in China) Production Team Ms. Elizabeth Morris, Senior Labour UNDP/MSWL project “Poverty Market and Human Resources Policies Research and Employment Facili- Specialist, Subregional Offi ce for East tation for Policy Development”: Asia, ILO Ts.Erdenechimeg, National Project Manager; P.Bolormaa, Former-NPM; Consultant: P.Tsetsgee, NHDR Coordinator; Dr. Siddiqur R. Osmani, Professor of E.Solongo, Administrative and Finan- Development Economist, School of cial Assistant Economics and Politics, University of Ulster, United Kingdom Translators

Proof-reading R.Baasan, B.Bayar, O.Enkhtuya, Dr. Ya.Dolgorjav, Professor, Mongolian B.Tungalag, D. Zaya Academy of Management; Advisor to the President of Mongolia (Mongolian) Photos Dr. G.Chuluunbaatar, Director, Insti- L.Elbegzaya, D.Tuvshinbayar tute of Philosophy, Sociology and Law, Academy of Science of Mongolia Layout and Design:

Ms. Kay Kirby Dorji, Freelance Editor/ Munkhiin Useg Co.,Ltd. Writer, USA/Bhutan (English) Designer E.Jimsee

4 MHDR 2007 ACKNOWLEDGEMENTS

The Mongolia Human Development Re- advice, comments, information and ma- port could not have been prepared without terials. The participants of the series of the generous contribution of many individu- consultative meetings held throughout the als and organizations. The report preparation years of 2005-2007 include: Ts.Adyasuren, team wishes to express its deep gratitude to A.Bakei, O.Baigalmaa, G.Batkhurel, all contributors, advisory board members, all B.Bayasgalan, P.Byambatseren, D.Byamba- participants of various consultative meetings tsogt, J.Byambatsogt, G.Chuluunbaatar, held in 2005-2007 for their invaluable com- A.Demberel, S.Demberel, O.Enkh-Ari- ments and hard work. unaa, B.Enkh tsetseg, B.Erdenebaatar, T.Gantumur, D.Jantsan, J.Jargalsaikhan, Advisory Board E.Khanimkhan, D.Khorol suren, B.Khuldorj, N.Mongolmaa, D.Namsrai, N.Naranchimeg, An advisory board consisting of experts D.Narmandah, Ts.Natsag dolgor, T.Navch, and representatives of various sectors was R.Oidovdanzan, D.Oyunchimeg, N.Oyun- established to provide their advice and dari, G.Pagma, M.Sarantuya, T.Saruul, guidance throughout the report preparation. D.Sengelmaa, B.Shinetugs, B.Surenchimeg, The members were: Ch.Dagvadorj (chair), A.Solongo, B.Soyoltuya, B.Suvd, Kh.Tsevel- R.Amarjargal, Member of Parliament; maa, U.Tungalag, Yu.Tuul, Ch.Undrakh, Ya.Dolgorjav, Advisor to the President of B.Uranchimeg, B.Zorigt, D.Zorigt and Mongolia; N.Enkhbayar, Advisor to Prime S.Zulfi kar. Minsiter; T.Enkhtuya, Ministry of Social Welfare and Labour; Sh.Mungunbat, Ministry Organizations shared their data and re- of Trade and Industry; G.Gerelt-Od, NSO; search fi ndings were: National Statistical Of- Kh.Ganbaatar, Mongolian Employers’ Associa- fi ce of Mongolia, Ministry of Social Welfare tion; T.Undarya, MonFemNet National Network and Labour; State Social Insurance General of Mongolian Women’s NGOs; G.Urantsooj, Offi ce; Mongolian Employers’ Association; “Center for Human Right and Development” and International Labour Organization. NGO; M.Chimeddorj, Confederation of Mongolian Trade Union; and Deputy Resident Extended thanks go to Team of Ministry Representative, UNDP Mongolia. of Social Welfare and Labour for their continuous collaboration. Special thanks go Consultations and Contributors to the UNDP Country Offi ce in Mongolia and ILO Team for their consistent support and Many individuals actively participated encouragement during the preparation of the in the consultative meetings during the prepa- report. Deep appreciation goes to SIDA for its ration of the report and provided invaluable fi nancial support.

The report preparation team

MHDR 2007 5 FOREWORD

Since 1997, Mongolia has prepared its National Human Development Report with the sup- port from UNDP and the fourth report is presented on “Employment and Poverty”.

Signifi cance of the present report lies on its assessment of issues related to the utilization of the economic growth of Mongolia to create employment and to ensure poverty reduction.

Internationally, especially in Asia where 60 percent of the world labor force resides, em- ployment is commonly recognized as an effective poverty reduction strategy. Specifi c feature of the proper employment policy is designed to be an important leverage for the dynamic socio- economic development of the country, which at the national level, creates an opportunity for the utilization of human capital, the country’s most valuable resource, while providing possibility for poor to exploit their advantageous working skills to generate personal income and contribute to the development of their country.

The gist of the human development concept is the impact of economic growth on human life. Accordingly, it is natural that there should be stronger demand for fair distribution of wealth, created by economic growth, to every family and citizen.

The present report has endorsed the importance of the creation of decent and highly produc- tive employment, which is the sole appropriate solution of the problem. The report emphasizes the importance of the job qualities yielding decent employment and the investment in human de- velopment and the effective implementation of human resource policy, reduction of gender gaps and the stronger support of rural employment and the consideration of internal migration issue in line with employment and poverty. In addition, it has analyzed the current status of employment among the different social groups, such as youth, children, women, disabled, herders and employ- ees of informal sector and formulated recommendations designed to improve their professional skills and to create favorable working conditions, and to generate more employment opportunities and to eliminate obstacles for poverty reduction of the population.

It is considered that the present report will facilitate the review of the National Development Policy, Government Action programme and the policy to ensure comprehensive human develop- ment and increase of decent work and reduction of unemployment and poverty, based on the Mil- lennium Development Goals.

On behalf of the Government of Mongolia, I would like to extend my deepest gratitude to international and national scholars and experts, and staff of the government and non-govern- mental institutions and citizens for their effort in preparing “Mongolian Human Development Report-2007” as well as the United Nations Development Programme and International Labor Organization for their full support.

SANJAAGIIN BAYAR PRIME MINISTER OF MONGOLIA

6 MHDR 2007 FOREWORD

UNDP and ILO are pleased to introduce the fourth National Human Development Report (NHDR) of Mongolia. Since 1990, UNDP has been supporting the preparation of annual Global Human Development Reports, which have served as analytical and policy advocacy tools de- signed to promote the concept of human development. Since 1992, commissioned by UNDP, NHDRs have been prepared and owned by independent national teams in about 135 countries, with focus on emerging human development issues in a country specifi c context.

In Mongolia, the fi rst NHDR was produced in 1997 to assess the Mongolian people’s well being in the transition period. The second NHDR 2000 analysed the role of the state in modern Mongolia and people’s expectation towards the state. The last NHDR in 2003 focused on urban – rural disparities.

The fourth NHDR’s theme, “Employment and Poverty”, was selected through consultative meetings. The theme is extremely timely in the new economic era for Mongolia, where, despite the recent strong economic growth, income poverty remains high both in rural and urban areas, and rising inequalities are resulting in unsuccessful knock-in to prevalence of poverty. In fact, the national Millennium Development Goals (MDGs) Report of 2007 indicates that the critical MDG 1 target of a 50 per cent reduction in the share of the population who are in poverty is in danger of being missed.

According to the Human Development concept, economic growth is a necessary condition for development. However, growth in itself does not translate in reducing poverty and improving people’s quality of life. The ILO advocates the approach of “working out of poverty” through the decent work agenda as a means for meeting the fi rst MDG target. International experience has demonstrated that rapid growth can lead to strong poverty reduction only through expansion of decent work – the creation of more and better jobs. In other words, decent work enables poor people to maximize their own labour power, the main resource which they possess.

In this context, the Report highlights the needs for a pro-poor employment policy and a strat- egy, which promotes integration of poor and marginalized men and women in the growth process so that they can equitably benefi t from it. Further, the Report emphasizes that the key aspect of employment promotion is not only the number of new jobs, but also the quality and location of those jobs, and the need to build the capacity of Mongolia’s working age population, especially the youth to be able to take advantage of these job opportunities.

UNDP and ILO would like to thank the national authors, editors, and advisory group members for their diligence in compiling this important report. We would like to extend our special thanks to Dr.S.R Osmani, Professor of University of Ulster, for his intellectual contribution and advice.

The NHDR on Employment and Poverty presents a number of important recommendations. It is extremely important that the Government, employers’ organisations and trade unions, as well as other stakeholders remain committed to continue to develop and implement, policies and pro- grammes to achieve the MDGs targets. For this, the United Nations in Mongolia stands ready to provide its continuous support.

Pratibha Mehta Constance Thomas UN Resident Coordinator & Director UNDP Resident Representative ILO Offi ce Beijing

MHDR 2007 7 CONTENTS CONTENT Abbreviations The preparation team Acknowledgement Foreword OVERVIEW 13 CHAPTER 1 Human development in Mongolia: Achievements and remaining 22 challenges 1.1 A new era for advancing human development in Mongolia 22 1.2 Human development in Mongolia: Emerging patterns 25 1.2.1 The human development index (HDI) 25 1.2.2 Poverty trends since 1991 29 1.2.3 Gender development indicators 31 1.2.4 Disparities in human development: Inter-regional differences 32 are moderating, but intra-urban and intra-rural inequality have increased sharply 1.3 Millennium development goals in Mongolia 34 1.4 Decent work and human development 35 1.5 Moving forward – An employment-based poverty reduction agenda for 37 Mongolia CHAPTER 2 Employability – A bridge between human development and employment 39 2.1 Education and training 40 2.2 Behavioural issues: Attitudes and alcoholism 46 CHAPTER 3 Employment and poverty: Links, trends and some cross-cutting issues 49 3.1 Key linkages 50 3.1.1 Employment and poverty: Analyzing the key linkages 50 3.1.2 Unemployment and poverty 52 3.1.3 Economically inactive population 54 3.2 Job creation trends – How many, where and are the earnings adequate? 57 3.3 Sectoral trends 62 3.4 The need for greater diversifi cation of sources of growth and job creation 64 3.5 The mining sector challenge: How to generate pro-poor growth 65 3.6 Employment generation in rural areas: Reaching poor herder households 67 3.7 Rolling back informality 71 CHAPTER 4 Special groups in the labour force 79 4.1 Youth employment 80 4.2 Women in the labour market 84 4.3 Reducing labour market gender inequalities 88 4.4 People with disabilities 91 4.5 Migrant workers 93 4.6 Children at work 98 CHAPTER 5 Recapping key recommendations and conclusion 105 1 Develop a national employment strategy as a core component of the 106 MDG-based National Development Strategy 2 Expand investment in human development 106 3 Bridge the skills mismatch between supply and demand in the labour 107 market 4 Reduce alcoholism 107 5 Improve labour market information 108 6 Diversify sources of economic growth and employment generation 108

8 MHDR 2007 CONTENTS

7 Diversify production and promote employment linked to mining 108 8 Rural employment generation – reinvigorating the soum centre economy 109 9 Rolling back informality 109 10 Promote decent and productive work for young people 110 11 Reduce gender inequalities in the labour market 111 12 Open opportunities for persons with disabilities in the labour market 112 13 Expand employment and ensure protection for migrant workers 112 14 Eliminate child labour 112 Conclusion: Place broad-based employment creation at the centre of strategies for growth and development Bibliography 115 Annexes 118 Technical notes 137 Defi nitions of terms 142

TABLES 1.1 Human Development Index by aimag and city, Mongolia, 1999-2006 22 1.2 Human Development Index 2005 Mongolia’s Global rankings in HDI and all 26 components 1.3 Human Development Indicators, Mongolia, 1990–2006 27 1.4 Central budget trends, Mongolia, 1990-2006, in infl ation-adjusted 1990 Togrogs 28 1.5 Change in HDI and its indicators, by aimag and city, Mongolia, 2000-2006 (sorted 29 by rate of change in aimags HDI, in descending order) 1.6 Poverty incidence by sex of the household head and urban-rural divide, Mongolia, 32 2002-2003 1.7 Inequality trends, 1998, 2002–2003 and 2006, GINI coeffi cient for consumption, 33 Mongolia 2.1 Gross enrolment rates and drop outs, Mongolia, 2003-2006 40 2.2 Reasons for dropping out of school for those classifi ed as uneducated young people 41 aged 15–29 years by sex, Mongolia, 2006 2.3 Graduates from secondary and tertiary institutions, Mongolia, 2005–2006 42 2.4 Percentage distribution of unemployed population by educational attainment, 42 Mongolia, 2002–2003 3.1 Poverty profi le according to economic activity of the household head, Mongolia, 51 2002-2003 3.2 Poverty status of households sorted by private, public and state-owned activity, 52 Mongolia, 2002-2003 3.3 Measures of unemployment, Mongolia, 2002-2003 53 3.4 Unemployment rates, by poverty status, Mongolia, 2002-2003 54 3.5 Reasons for being economically inactive for population 15+ years by sex and 56 urban-rural residence, Mongolia, 2002−2003 3.6 Employment elasticity growth by three recent periods, Mongolia 58 3.7 Change in employment by industrial classifi cation, Mongolia, 2000-2006 59 3.8 Net employment creation by location, Mongolia, 2000-2006 59 3.9 Job creation, real wages and productivity by sector, Mongolia, 2003-2006 60 3.10 Active enterprises by employment size, Mongolia, 2001-2006 61 3.11 Number of livestock in bod, 1989-2006 68 3.12 Size distribution of herds - livestock/household, all households with private 68 livestock, Mongolia, 1999 and 2006 3.13 Khan bank loans and deposits, Mongolia, 2002-2007 69 3.14 Currently employed population 15+ years employed in non-agricultural private 72 enterprise, partnerships and self-employed as a main occupation, Mongolia, 2002-2003 3.15 Social insurance indicators, Mongolia, 1995, 2000, 2006 75

MHDR 2007 9 CONTENTS

4.1 Young people aged 15–29 by labour force status and educational attainment, 80 Mongolia, 2006 4.2 Young people at work by age group, Mongolia, 2006 82 4.3 Female employment representation by industrial classifi cation, Mongolia, 2002- 85 2003 and 2006 4.4 Occupational classifi cation of currently employed by sex, Mongolia, 2002–2003 86 4.5 Classifi cation of currently employed by status in employment and sex, Mongolia, 86 2002–2003 4.6 Number of children in pre-school, Mongolia , 1990, 1995, 2000 and 2006-2007 88 4.7 Average monthly wages and salaries by industrial classifi cation, Mongolia, 2006 90 4.8 Employment ratio and the proportion of unemployed and inactive among people 91 with disabilities aged 15 years and older by sex, Mongolia, 2004 4.9 Average monthly earnings of migrants in the Republic of Korea, Czech Republic 96 and the United States, 2004 4.10 Educational attainment of Mongolian migrants in the Republic of Korea, Czech 96 Republic and the United States, 2004 4.11 Workers’ remittances through offi cial channels, Mongolia, 2003-2006 (in Millions 97 of US dollars)

FIGURES 1.1 HDI, GDI and GEM Indices, Mongolia, 2000−2006 31 1.2 Poverty headcount by distance of regions from Ulaanbaatar, Mongolia, 2002-2003 34 3.1 Reasons for inactivity for selected groups aged 15+ years by sex, Mongolia, 57 2002−2003 3.2 Trends in a measure of the category for “not in employment” and “not in school” 57 compared to the employment-to-population ratio and registered unemployment rate, Mongolia, 1992-2006 3.3 Percentage distribution of employment by major sector, Mongolia, 1995−2006 62 3.4 Shares of employment and GDP in agriculture, Mongolia, 1995–2006 62 3.5 Shares of employment and GDP in the industrial sector, Mongolia, 1995–2006 63 3.6 Numbers of people employed in the industrial sector, Mongolia, 1995–2006 63 3.7 Shares of employment and GDP in the service sector, Mongolia, 1995–2006 63 3.8 Numbers of people employed in the service sector, Mongolia, 1995–2006 64 3.9 Some characteristics of employment in the informal sector for non-agricultural 73 activities, Mongolia, 2002−2003 3.10 Educational attainment of current employment in the informal sector, Mongolia, 73 2002−2003 4.1 Unemployment rates by age group and urban-rural residence, Mongolia, 81 2002−2003 4.2 Age-specifi c labour force participation rates by sex, Mongolia, 2002–2003 85 4.3 Unemployment rates by age group and sex, Mongolia, 2002–2003 88 4.4 Share of population in urban areas and annual urban growth, Mongolia, 1990–2006 94 4.5 Population increase of Ulaanbaatar 1989-2006, broken down into natural increase 94 and net in-migration 4.6 Percentage of children in the labour force, Mongolia, 2002−2003 99

10 MHDR 2007 CONTENTS

BOXES 1 The Constitution of Mongolia, Article 16-4 24 2 Working out of poverty 25 3 The Human Development Index (HDI) 26 4 “Urban” and “Rural” – the offi cial defi nition 30 5 The rural poor are seriously disadvantaged in securing access to health services 36 6 National Plan of Action for Decent Work in Mongolia (2005−2008) 38 7 Policy options for job creation in small and medium enterprises 62 8 international experience in employment generation; India’s National Rural 70 Employment Guarantee Act 9 National Policy on the Informal Economy 74 10 ADB and World Bank country gender assessment of employment 89 11 Economic activity, child labour and hazardous work 99

SKETCH MAP 1 Human Development Index by aimag and city, Mongolia, 2006 12

ANNEXES Tables A1 Human Development Index and its indicators, by aimag and city, Mongolia, 2006 118 Human Development Index and its indicators, by aimag and city, Mongolia, 2000- 119 A2 2006 A3 Human Development Index and its indicators, by region, Mongolia, 2000-2006 122 A4 Human Development Index of the countries in transitional economy, 2004 123 A5 Gender Development Index and its indicators, by aimag and city, Mongolia, 2006 124 A6 Gender Development Index, by aimag and city, Mongolia, 2003-2006 125 A7 Gender Development Index and its indicators, by region, Mongolia, 2006 125 A8 Gender Development Index, by regoin, Mongolia, 2003-2006 126 A9 Gender Empowerment Measure and its indicators, by aimag and city, Mongolia, 2006 126 A10 Gender Empowerment Measure, by aimag and city, Mongolia, 2003-2006 127 A11 Gender Empowerment Measure, by region, Mongolia, 2003-2006 127 A12 Mongolia: Millennium Development Goals (MDG) 128 A13 Population profi le, Mongolia, 1989-2006 131 A14 Urban and rural population, by aimag and city, Mongolia, 2006 131 A15 Main economic indicators, Mongolia, 1995-2006 132 A16 Employees by sectors, at the end of the year, thousand persons, Mongolia, 1997-2006 133 A17 Employees by aimag and city, thousand persons, Mongolia, 1997-2006 133 A18 Working age population, employment and unemployment rates, Mongolia, 1995-2006 135 A19 Number of registered unemployed entered into work, Mongolia, 1995-2006 135 A20 Women and economic participation, Mongolia, 1995-2006 136 Sketch maps A1.1 Number of primary and secondary schools by aimag centers, Mongolia, 2006 129 A1.2 Number of primary and secondary schools by soums, Mongolia, 2006 129 A2 Infant mortality rate (per 1000 live births) by aimag and city, Mongolia, 2006 130 A3 Maternal mortality rate (per 1000 live births) by aimag and city, Mongolia, 2006 130 A4 Employment rate by aimag and city, Mongolia, 2006 134 A5 Unemployment rate by aimag and city, Mongolia, 2006 134

MHDR 2007 11 0 0 2006 Calculations from NSO for NHDR 2007 Source: Mongolia, Human Development Index, by aimag and city, 0 Sketch map 1

12 MHDR 2007 OVERVIEW

A new era for advancing human development in Mongolia – strong growth, a robust budget but continuing high poverty rates

Mongolia has entered into a new era well off. If this trend continues, large scale in its development. Mongolia’s Human reductions in poverty will be quite diffi cult to Development Index (HDI) is now at its highest achieve. level ever, and has increased in every region of the country. All three components of the Why is it that in Mongolia today HDI, indicators measuring status of health, strong economic growth is not leading to education and income, have risen signifi cantly the anticipated impact on poverty? Why in the last seven years, and the HDI has has growth been accompanied by widening improved signifi cantly in all aimags. In the inequality? International experience has last fi ve years the gap in the HDI between demonstrated that there is no automatic link more and less advanced aimags has been between growth and poverty reduction and shrinking. Mongolia is also showing progress that expansion of decent work – the creation in most of the Millennium Development of more and better jobs – is the key channel Goals. Achievement of 60 percent of the 22 by which rapid growth can lead to strong national targets is on track, including the vital reductions in poverty, because employment infant and maternal mortality goals. allows poor people to take advantage of their labour power, the main resource which they This progress is taking place as the possess. There is a broad consensus that for overall economic situation has taken a many Mongolian men and women, economic dramatic turn for the better, with economic growth is not yet fulfi lling this role that not growth averaging 8.7 percent for the last enough jobs are being created, that too many four years, budget revenues and expenditures of the jobs that exist in Mongolia today are rising by more than 30 percent per year over characterized by working conditions and that period and a rapid expansion of the low-productivity that do not offer adequate banking sector as well. Conditions are present compensation to allow families to rise out of for a sustained economic expansion and for a poverty, that decent work opportunities are not major Government effort to promote human being created in places where poor people live, development throughout the country. and that in many cases Mongolian workers do not possess the skills that are needed to take That effort should start from the advantage of employment opportunities that recognition that even under these conditions are present. poverty continues to be a major problem in Mongolia, only falling very slightly, to 32.2 For these reasons a National Employment percent of the population, as of 2006, with rural Strategy focusing on the promotion of decent poverty of 37 percent a particularly serious work should be one of Mongolia’s highest challenge. It is also striking that in the last priorities at this time, to spread the benefi ts year several other MDG indicators, including of growth more equitably and to allow all the school enrolment ratio, the primary school Mongolian women and men to realize in their completion rate, the share of women in wage lives the vision of the Mongolian Constitution, employment in the non-agricultural sector and which recognizes the right of each citizen to the percentage of land area covered by forest, decent employment. Formulation of possible are showing signs of losing ground, instead content for an ambitious employment-based of improving, making their achievement also agenda for poverty reduction in Mongolia is the very unlikely. Recent sharp increases in a theme of this National Human Development key measure of income inequality, the Gini Report, the fourth such report produced in coeffi cient, suggest that a large share of the Mongolia. Starting with a recognition of the benefi ts of growth is going to those already role of employment in human development,

MHDR 2007 Overview 13 OVERVIEW both as an inherent part of a life with dignity take advantage of new opportunities that and value, and as a key means toward gaining are present? freedom from poverty, the report analyzes the trends in employment and unemployment A National Employment Strategy that and their links to poverty, along with issues successfully addresses these issues will be in important sectors and among some of the no simple task. However conditions are in vulnerable groups of the population. place for major achievemnts, building on and intensifying policies and action plans Expanded investment in Human that have been developed in recent years, Development will be one key component such as the National Employment Promotion in this strategy. Bridging development gaps Programme, the Informal Economy Policy and between poor rural areas and the rest of the the National Plan of Action for Decent Work. country, and between the ger districts on the There is also valuable international experience outskirts of Ulaanbaatar and the rest of the to draw upon, which has demonstrated clearly capital, is a high priority, as these areas have that policies matter – Governments that focus the country’s highest school drop-out rates on employment generation and decent work can and the lowest levels of sanitation and other have an enormously positive impact on the lives basic health services. Rapid expansion in of their people. overall Government spending in social sectors is a welcome development, but attention is Employability – a bridge between needed to ensure that an adequate portion human development and employment of these expenditures is targeted at the poor groups whose need is most urgent. Employability refers to the capacity of men and women to obtain and retain What else should be done to allow more employment, and encompasses a range of of Mongolia’s people to share in the benefi ts skills, knowledge, attributes and attitudes. It of economic growth? A National Employment is a bridge between human development and Strategy will need to focus on several employment, because it deals with the capacity important issues: of women and men to obtain and hold jobs that provide income and dignity, allowing 1. The number of jobs being created - Is there them to meet the basic needs of their families enough job creation for new entrants to the and to ensure that their children are given the labour market, for those who are currently childhood and education that will enable them unemployed or underemployed, and for to avoid the risks of poverty. those who are moving from rural to urban areas? Surveys of Mongolian employers have 2. The quality of jobs being created - Do revealed widespread dissatisfaction with they offer job security and a sustainable the qualifi cations of the job applicants that path out of poverty for poor families? Is they are seeing. Key issues in enhancing the the level of real earnings high enough to employability of Mongolian workers are: support decent lives for workers and their a. Basic education. Improving basic families? education and reducing the drop-out rate, 3. The location of jobs being created - Are especially among rural boys who are jobs being created where workers, and more likely than any other group to fail to specifi cally poor people in search of complete their basic education. employment, are able to access them? b. Secondary and tertiary education. 4. The capacity of Mongolia’s working age The need to strengthen the links between population to engage in productive work schooling and the demands of the job - Do they have the education, training, market, so that school graduates are experience and sound health necessary to better able to meet the requirements of employers.

14 MHDR 2007 Overview OVERVIEW c. Vocational training. Here too, the need to multi-stakeholder effort to reform vocational strengthen the links between the training education and training, and another joint effort that is offered and the skills that are actually to strengthen the links between education and in greatest demand in the labour market. the demands of the labour market. Surveys have shown that employers and employees are frequently disappointed In view of the large negative economic with the type and level of skills that are and social impact of alcohol abuse in Mongolia currently being provided. today, Government efforts to curb alcoholism could be intensifi ed, both through education d. Attitudes toward education. There is a campaigns and through measures to regulate general perception among young people access to alcohol. and their parents that academic education is likely to lead to better careers, whereas at At the same time, Government could present the number of university graduates increase investment in the core human is greater than the openings that they can development issue of steadily improving basic fi ll, and there is high unmet demand in education and ensuring that all Mongolians, well-paying jobs in mining, construction, including children of poor families, complete food processing and other sectors for which this programme and enter their working lives strong technical and vocational training with a useful set of basic literacy, numeracy would be far more useful. and other skills. e. Alcoholism. A major recent WHO study confi rmed that alcoholism is a major Employment and poverty obstacle to employability for many There are strong linkages between the Mongolians, especially poor men, for employment of the head of a household and whom alcohol abuse is a leading factor in that household’s poverty status. Working with a vicious poverty trap, leaving them unable data from the 2002-2003 Living Standards to obtain or retain employment that could Measurement Survey, the report calculates take them out of poverty. a “poverty likelihood ratio” (PLR) for The key for the Government to address households, the ratio of each group’s poverty employability issues in a comprehensive way incidence to that of the overall population is fi rst to establish a framework for reviewing sorted according to whether the head is curricula, setting standards and issuing working and the sort of work. Households certifi cation for workers who have successfully headed by an individual who is of working completed training. One direct way to achieve age but is economically inactive – i.e. neither this would be by creating a national council working nor looking for work – are the most on vocational training, skills standards and likely to be poor, with a PLR of 1.42, notably certifi cation, involving key stakeholders who more likely even than households headed by will work together to support the development an unemployed individual, who have a PLR of a legal framework, fi nancing mechanisms, of 1.33. Households headed by a herder have methodological centres, vocational standards, a PLR of 1.09, meaning they have a higher pedagogical issues, certifi cation procedures, poverty rate than the population as a whole. teacher training, school management and Also striking is the fact that households training facilities among others. This council, with a head who is working in the private which should include representatives of sector, and not a herder, also have a PLR of Government, employers, trade unions and almost exactly 1, meaning that they are as educational institution, would oversee the likely to be poor as the average Mongolian establishment of professional qualifi cation household. Among classifi cations studied, standards that will be of use to Mongolian it was only households headed by people workers seeking employment at home and working for the Government or for a state- abroad. This council could also oversee a

MHDR 2007 Overview 15 OVERVIEW owned enterprise that were signifi cantly less only working a few hours a week, generally likely to be poor than the average. in the informal sector, consider themselves unemployed, although technically that is not The key fact here is that more than 52 the case. One reason why households headed percent of Mongolia’s poor households, as by employed individuals are frequently identifi ed in that survey, were headed by poor, as noted above, is that some of those individuals who were working; 29 percent individuals are only working a few hours a of those households were headed by herders, week. and 23 percent were headed by individuals working in the private sector. Although many Job creation trends households headed by the unemployed and the economically inactive are poor, most poor An employment-based poverty reduction households are headed by people who are strategy that will address these problems must working. The challenge in reducing poverty is focus on: creating more jobs, to absorb the not simply to create more jobs, but to create unemployed and inactive; creating better better jobs that provide higher incomes. jobs with greater labour productivity and higher real earnings to reduce the number of Unemployment working poor and provide greater incentive to the economically inactive to enter or re- High poverty among the households enter the labour force; creating employment headed by the unemployed shows that opportunities in the rural areas to provide more jobs are needed. additional sources of income for poor herding households, and building the skills base of High poverty among the employed the Mongolian labour force so that they are shows that better jobs are needed. better prepared to take advantage of new opportunities as they become available in both According to statistics compiled paid employment and self-employment. by the labour and social welfare offi ces, unemployment has remained stable at around How is the economy doing in this 3.5 percent for the last fi ve years. The most respect? In recent years, even as economic recent data in the Mongolian statistical growth has accelerated, the pace of job yearbook count 32,928 registered unemployed creation has slowed. We see that even as in 2006, of whom 43.0 percent were male growth accelerated sharply after 2003 the and 57.0 percent were female. This equals pace of job creation slowed by nearly 30 an unemployment rate of 3.2 percent of the percent, with only 83 thousand net new jobs labour force, a number that, on the surface, being created in 2003-2006, compared to 118 seems to suggest that unemployment is not a thousand in 2000-2003. Even more striking is problem in Mongolia. that the stronger net job creation in 2000-2003 occurred even as the number of herders fell However, according to international by over 43.0 thousand, whereas in 2003-2006 standards a person is employed if he or she the number of herders declined by less than was engaged in the production of goods and 14.0 thousand. The increase in employment services for just one hour in the week preceding outside of the herding sector in 2003-2006 the survey or was absent from work but had a was 97,000, compared to 161,000 in 2000- “job attachment.” This is very different from 2003. This is a very sharp decline of nearly how most people perceive “employment”, 40 percent. The location of the jobs that have which is why surveys that ask Mongolian been created offers another explanation for women and men to provide information about continued high rural poverty rates. In 2000- whether they are employed or unemployed 2003 43.0 thousand net new jobs were added frequently report unemployment rates as outside of Ulaanbaatar, but in the next three high as 30 percent. Most of them who are years that number fell to only 14.2 thousand.

16 MHDR 2007 Overview OVERVIEW

The share of total employment in low- Diversifi cation of sources of growth income sectors continues to be very high, and employment although new job creation in some higher wage sectors is accelerating as well. From 2003 to This points to the need for greater 2006 39 percent of new jobs were added in the diversifi cation in the Mongolian economy, low-paying wholesale and retail trade sector, one of the leading challenges in promoting more than from any other sector. Construction job creation, for two reasons. First, the mining and mining had the most positive trends, sector is capital-intensive, and creates fewer creating 27 percent and 13 percent of new jobs per unit of new GDP than most other jobs, respectively, and both also showing sectors. Second, the surge in the value of mining strong increases in real wages. However as sector output in recent years has been largely noted above the overall pace of job creation driven by global commodity price increases, slowed signifi cantly during those years, which has increased the value of Mongolia’s so the actual number of jobs created in copper and gold exports, while physical output these two sectors was only 31.0 thousand, of gold and copper have increased much more less than 4 percent of the total work force. slowly. Under such conditions, the pace of A striking trend was the improvement in job creation is even slower. In addition to real wages for the 15 percent of the labour the wider issues associated with commodity- force engaged in Government sectors such based growth – the well-known “resource as public administration, education and curse” that has undermined growth in many health. The real wage in these groups rose resource-rich countries – diversifi cation of the by an average of 35.2 percent between economy is vitally important to make growth 2003 and 2006, refl ecting large increases in more pro-poor and more labour-intensive. Government salaries during those years1. Making the mining sector a better The pattern of high economic growth source of employment but slow job creation can be illustrated in another way, through examination of long- Nevertheless, the mining sector is term GDP and employment trends in the certain to be a vital part of the Mongolian agricultural and industrial sectors. Between economy in the coming years, and should be 1999 and 2006 the share of the Mongolian properly managed to provide the maximum work force engaged in the agricultural sector possible boost to employment and human fell by approximately one fi fth, from 49.5 development. A number of steps can be taken percent to 38.8 percent. However in that same toward this end. Most importantly, the budget period, the share of Mongolian GDP that revenues being generated by the mining sector those workers were generating fell from 37.0 can be utilized to promote more inclusive percent to 18.8 percent, i.e. by more than half. growth, through investment in infrastructure We can see that the amount of value added development, in training programme and being produced by each agricultural worker in human development. Linkages between fell very dramatically. In that same period mining and other sectors should be ehnahced, the share of GDP produced by the industrial such as through provision of incentives to sector, including mining, doubled, from 20.6 mining operations to build processing plants percent to 40.3 percent, while the share of the in Mongolia, and source their power and work force inched up from 15.5 percent to other key inputs from Mongolian providers. 17.3 percent. The productivity of the industrial In addition, the informal mining sector, which work force increased sharply, but the number is developing into an important source of of workers in the sector grew very slowly. employment and income for a large number of This largely a result of strong growth in the the rural population, should be regulated and mining sector, whose share of GDP increased gradually formalized. to more than one third in 2006.

1This paragraph focuses on wages and salaries rather than earnings, which is a limitation insofar many workers are self-employed. MHDR 2007 Overview 17 OVERVIEW

Employment generation in rural Mongolians. However there are concerns areas – reaching poor herder about the quality of informal jobs, most households of which are unregistered, unprotected and unorganized, and much of Mongolia’s Mongolia’s rural economy is undergoing problem of high numbers of working poor rapid changes, much like the rest of the refl ects conditions among some informal economy. The number of herding households workers. The National Policy on the Informal with large commercial-size herds is higher than Economy, a tripartite effort involving the ever. Rural fi nancial services are burgeoning, Government, employers’ organizations and and the shares of herder households with trade unions, aims to roll back informality, by electricity and own vehicles and major providing Government services and creating appliances are much greater than ever before. legal protection guarantees for informal At the same time – also much like the rest of sector workers. Accelerating and expanding the country – a sizeable proportion of the rural this effort could facilitate a way out of population is not sharing in these gains, with poverty for many Mongolian families. Some rural poverty still running at 37 percent as of areas in which further efforts are possible 2006, much higher than urban poverty at 26 include expanded registration of informal percent, most importantly among herders with economy workers in order to improve access a small number of livestock. Those herders are to Government services, a campaign to raise stuck in a poverty trap, as their need to consume awareness among informal workers about animals makes it very diffi cult for them to job contracts and labour rights, a programme increase their herds, and because, in any case, to improve workplace safety in the informal there is limited scope for further increase of the sector through participatory assessments national herd due to ecological constraints. The and other actions, and broader use of the best path out of poverty for these families is to Employment Promotion Fund to support fi nd new sources of income. However, as noted activities that will improve productivity and earlier, the rate of job creation in rural areas has earnings in the informal economy. slowed markedly in recent years. Special groups in the labour force A rural employment generation programme focusing on the soum centres and Even if job creation accelerates, and offering new training opportunities together overall productivity and earnings improve, with business development, training, and job there are groups in the Mongolian population mediation services, among others, along with who will still face specifi c barriers to the expanded investment in physical infrastructure training, education and decent employment and local economic development, offers the that will allow them to lead full and best way to reach these households. A larger productive lives, free of the threat of poverty. share of the Government’s Employment Among them the labour market problems of Promotion Fund could be earmarked for soum Mongolian youth, women and people with centre efforts. For these activities to have the disabilities require special attention and action. greatest possible impact it, would be desirable Domestic and international migration, which to complement them with a decentralization has become a vital path to higher income programme, giving local Governments for hundreds of thousands of Mongolians, greater authority to chart and implement local also poses challenges to Government policy. development initiatives, including greater local Another labour market issue needing strong authority to raise and make decisions regarding Government action is the problem of child collection and expenditure of fi scal resources. labour, evidenced by the recent increase in school drop-outs, particularly in rural areas, Rolling back informality refl ecting the decision by poor families to have their children start earning income at Mongolia’s informal economy provides an early age, frequently at the cost of future jobs and income for a large number of employability. 18 MHDR 2007 Overview OVERVIEW

Youth unemployment is more than double that women’s access to well remunerated that of the overall population – the recent School employment is equal to that of men. Legal to Work Transition Survey found a youth measures requiring non-discrimination against unemployment rate of 14 percent. Although women need to be fully implemented. The the occurrence of unemployment is lower problem of the heavy dual burden on women among rural youth than urban, most likely due of work and family responsibilities is another to the ease of fi nding some work, even if not challenge that Government can address very productive work, in herding, the duration through expanded child care and promotion of unemployment tends to be much longer for of fuller sharing of responsibilities at home. those in rural areas who are unemployed. In both urban and rural settings one fundamental According to the National Statistical problem is a skills mismatch between the skills Offi ce there were 82,300 Mongolian women gained by youth in school and training and the and men with disabilities of working age in demands of employers. There is a clear need 2006, with just 13 percent in employment for targeted training programmes providing although the Ministry of Social Welfare and marketable skills to youth across the country, Labour estimates that roughly 80 percent are as well as for careful attention to the specifi c capable of holding a job. Only an estimated problems of unemployed youth in the work 20 percent of persons with disabilities in need of the national council on skills, standards of vocational training have access. This raises and certifi cation. Attitudes toward vocational fundamental issues of rights to lead a full life, training and unrealistic expectations regarding and of human development, for a group that ability to move straight from school to high- make up over 5 percent of Mongolia’s working paying and prestigious white collar jobs also age population. Although the Government are hampering young people’s transition from has established programmes, and ratifi ed school into the labour market. international conventions, aimed at allowing people with disabilities participate in training Although women make up more than half and employment, in reality their opportunities of Mongolia’s labour force, they face clear are still limited by lack of funding, lack of diffi culties in obtaining equal pay for equal physical access and lack of enforcement work, compared with men, and also in rising capacity, particularly in rural areas. to managerial posts for which they possess strong qualifi cations. Recent studies by the The scale of domestic migration in ILO suggest that if men’s and women’s pay recent years is demonstrated most clearly in were being based completely on the work done examining Ulaanbaatar’s population trends. and on their experiences and qualifi cations, Nearly 70 percent of the increase of 427,000 without regard to sex, women’s pay would be in the capital’s population since 1990 has on average 22 percent higher than at present. been due to internal migration. Studies of the Studies have also found that women are living conditions for migrants in Ulaanbaatar excluded from managerial positions in almost have shown that although the most common all sectors, and are less likely to fi nd work motivation for their move has been the search in high productivity, high earnings sectors, for employment many face great diffi culties such as mining. This creates an economic in gaining access to training, employment loss for the whole society, since the skills and and business development services, and their capabilities of half of the country’s labour children often face problems in accessing force are not being effectively utilized, and education. One central problem is the is a direct obstacle to women’s ability to continued existence of barriers that migrants develop their capacities and lead full and face in registering as urban residents to rewarding lives. A sustained and deliberate establish eligibility to Government services. effort is needed by Government to mainstream This practice prevents labour mobility from gender perspectives into the full spectrum of performing its important function of shifting employment promotion initiatives, to ensure labour into geographical areas and sectors in

MHDR 2007 Overview 19 OVERVIEW which the demand for their services is highest. to take advantage of good employment International migration is also an increasingly opportunities. The trend of employers hiring common route to employment for Mongolian foreign workers in many well-paying jobs workers, and greater Government attention can only be reversed if Mongolian workers is needed to improving management to have the skills that employers require, are labour migration, offering protection to in sound health and free of the problem of migrant workers and facilitating the return an alcoholism. reintegration of workers from abroad into the Mongolian economy, making full use of the In addition, a well-functioning labour skills they gain overseas. market should allow all the Mongolian people to make their full contribution to the country, Although Mongolia is a party to all the and develop to their own full potential. At this major international conventions on ending time too many women are not able to do so, child labour, and in particular on ending the due to unequal treatment that they face in the worst forms of child labour, greater efforts are workplace and in broader society. Mongolian called for to enforce these agreements, in joint youth frequently leave school without the efforts together with employers organizations preparation they need to fi nd productive and and trade unions. rewarding work. Persons with disabilities in Mongolia also face constraints that prevent Three key facts that have emerged in the them from making their full contribution to last 10 years in Mongolia are: the country’s prosperity. A distressingly high number of Mongolian children are sacrifi cing a. Economic growth alone is not going to their futures by dropping out of school in order generate good jobs for all the Mongolian to earn income for their families today. people. Indeed, the strong acceleration of growth in the last four years has been International experience demonstrates accompanied by a slower pace of job that policies matter. Enactment of national creation than in preceding years. policies and programmes can have a considerable and sustained impact on these b. Not all jobs are alike. Mongolia needs to problems, and lead to more and better work create more good jobs or decent work in and enhanced human development. At this paid employment or self-employment, time, with strong economic growth and very with the potential to provide workers with impressive improvements in the Government’s a reliable source of income, with decent budget revenues, there is both urgent need working conditions, with representation in and great opportunity to move ahead with an decisions about programmes and policies ambitious National Employment Strategy as a that affect them, and with compensation core component of the MDG-based National that is high enough to allow their families Development Strategy, centred around a a decent standard of living. Too many of package of measures aimed at the creation of Mongolia’s people who report that they good employment for Mongolia’s people, and are working, are either in poverty or live addressing the specifi c problems of gender in risk of falling into poverty. The danger inequality, child labour and inability of of a dualistic labour market, with one portion people with disabilities to fi nd employment. in good jobs with adequate compensation, This Mongolia Human Development Report while many more are still in low-paying presents options for doing so, because such low-benefi t jobs in the informal or livestock goals touch on the very core meaning of sectors, is very serious. the Human Development Concept: giving women and men the opportunity to live full, c. Unless measures are taken to ensure productive and rewarding lives in accordance that Mongolian workers have the right with their full potential. skills and qualities, they will be unable

20 MHDR 2007 Overview CHAPTER 1 Human development in Mongolia: Achievements and remaining challenges

MHDR 2007 Overview 21 HUMAN DEVELOPMENT IN MONGOLIA

Human development in Mongolia’s Human Development Index Mongolia: Achievements and (HDI) is now at its highest level ever, and has increased in every region of the country. remaining challenges All three components of the HDI-indicators measuring status of health, education and This chapter lays a foundation for the income – have risen signifi cantly in the last report by presenting recent trends in Mongolian seven years, and the HDI has improved human development across all aimags and in signifi cantly in all aimags. all components of the Human Development Index (HDI). Despite an increasing HDI and Table 1.1 Human Development Index by aimag high economic growth since 2004, it shows a and city, Mongolia, 1999-2006 Aimags disturbingly high poverty incidence. Poverty and the 1999 2000 2001 2002 2003 2004 2005 2006 trends are analyzed in more detail. Similarly Capital mixed key fi ndings of the Millennium Arkhangai 0.637 0.643 0.631 0.625 0.629 0.643 0.660 0.675 Development Goals (MDG) Report 2007 are Bayan-Olgii 0.627 0.640 0.636 0.629 0.643 0.652 0.677 0.690 presented, indicating strong progress toward Bayankhongor 0.614 0.617 0.636 0.572 0.595 0.617 0.645 0.658 achievement of most MDG targets, including Bulgan 0.671 0.678 0.666 0.655 0.657 0.670 0.682 0.692 those on infant and maternal mortality rates, Govi-Altai 0.620 0.635 0.632 0.588 0.613 0.646 0.659 0.657 but very slow progress – and even regression Dornogovi 0.637 0.646 0.623 0.630 0.638 0.653 0.662 0.670 – in others, including poverty and school Dornod 0.587 0.595 0.593 0.600 0.617 0.622 0.636 0.648 enrolment rates. The theme of promoting Dundgovi 0.666 - 0.651 0.643 0.665 0.674 0.689 0.701 more and better jobs as a key means of Zavkhan 0.622 0.619 0.631 0.614 0.636 0.642 0.664 0.676 accelerating the pace of poverty reduction Ovorkhangai 0.630 0.605 0.593 0.594 0.613 0.631 0.655 0.668 Omnogovi 0.656 0.660 0.659 0.631 0.673 0.674 0.710 0.725 is introduced early in the chapter and then Sukhbaatar 0.643 0.651 0.626 0.637 0.661 0.672 0.691 0.701 analyzed in more detail. Emphasis is given Selenge 0.650 0.645 0.650 0.656 0.660 0.668 0.676 0.689 to the role of employment as the channel by Tov 0.652 0.646 0.664 0.628 0.654 0.659 0.670 0.680 which economic growth translates into broad- Uvs 0.608 0.605 0.611 0.605 0.627 0.646 0.659 0.672 based improvement in living standards. But Khovd 0.633 0.651 0.664 0.632 0.643 0.660 0.676 0.686 the need to devise strategies for creation of Khovsgol 0.607 0.614 0.593 0.587 0.599 0.614 0.628 0.643 more and better jobs, including in the places Khentii 0.646 0.655 0.635 0.632 0.647 0.661 0.677 0.683 where Mongolia’s poor women and men live, Darkhan-Uul 0.634 0.644 0.666 0.659 0.663 0.664 0.682 0.689 is not enough by itself. At the same time, Ulaanbaatar 0.705 0.707 0.711 0.722 0.722 0.722 0.734 0.745 steps must be taken to enhance the capacity of Orkhon 0.732 0.751 0.700 0.724 0.759 0.793 0.802 0.805 Mongolian workers to take advantage of new Govisumber 0.673 0.678 0.689 0.644 0.675 0.709 0.714 0.718 good employment opportunities. The chapter National 0.661 0.667 0.667 0.667 0.680 0.692 0.707 0.718 then analyzes some of Mongolia’s key human Source: 1999 data taken from 2003 NHDR, 2000-2006 data from NSO. development challenges, especially in rural areas and the ger districts of urban centres. Another key set of measures for assessing It concludes with a discussion of the link development are the Millennium Development between decent work and human development, Goals (MDGs), which set specifi c targets for and the role of an employment-based poverty poverty reduction, maternal and child health, reduction programme in the country’s overall gender equality, education, environmental development agenda. sustainability and arresting the spread of communicable diseases. Mongolia has 1.1 A new era for advancing accepted the 2000 Millennium Declaration and human development in has adapted the MDGs to Mongolia’s specifi c conditions, through the setting of goals and Mongolia targets, policies and measures and national Mongolia has entered a new era in its programmes aimed at their implementation2. development. As presented in Table 1.1, 2Government of Mongolia. 2007. The Millennium Development Goals Implementation. Second National Report, Ulaanbaatar, Mongolia.

22 MHDR 2007 Chapter 1 HUMAN DEVELOPMENT IN MONGOLIA

In addition to the eight global goals, the going to those already well-off. If this trend Government of Mongolia has committed to continues, large-scale reductions in poverty achieve a national MDG 9, on human rights will be quite diffi cult to achieve. A key public and democratic governance. The Government health target, the percentage of the population has set itself 24 indicators and 22 targets to be using improved sanitation facilities, also is achieved by 2015, and achievement of many rated as making “slow progress” meaning of these targets is on track, including the vital that achievement will be diffi cult. Several infant and maternity mortality goals. other MDG indicators, including the school enrolment ratio, the primary school As can be seen in Table A15 in the Annex, completion rate, the share of women in wage this improvement in HDI and MDG progress employment in the non-agricultural sector and has coincided with three extremely positive the percentage of land area covered by forest, economic developments: (i) the fi rst sustained are showing signs of losing ground instead strong economic growth since Mongolia of improving, also making their achievement launched its transition to a market economy, very diffi cult. The Government recognizes the with annual growth in Gross Domestic urgency of achieving the MDGs and moving Product (GDP) averaging 8.7 percent from determinedly in implementing the necessary 2004 to 2006; (ii) an extraordinary increase economic and social policies and programmes in budget resources and spending, with total to make this happen. Government spending doubling in the three years from 2003 to 2006, and with spending Clearly, even the remarkable economic in key social services rising rapidly; and (iii) progress of recent years has not been enough an unprecedented expansion in the level of in itself to achieve some critical social activity of the Mongolian fi nancial sector, development goals. This distinction between with the total volume of loans outstanding at economic growth and the improvements in year-end nearly tripling3 between 2003 and people’s lives that growth can create lies at the 2006. While most of this lending is issued heart of the concept of human development4. in Ulaanbaatar, the share of loans elsewhere This concept was formulated in the late 1980s, in the country has risen from 15.7 percent in under UNDP auspices, in response to a sense 2004 to 22.8 percent in 2006. The volume that although most people agreed that income of loans outstanding outside of Ulaanbaatar is good only if used for good purposes – to in 2006 was nearly four times higher than in buy milk, for example, instead of alcohol – 2003, and equal to more than 60 percent of the economic development around the world was total stock of loans across the nation in 2003. still being assessed only in terms of the speed of economic growth. And yet it was already At the same time, worrisome signs are recognized that some countries had achieved visible. Only seven years remain until the great progress in many key indicators of 2015 target date for achieving the MDGs, development – longevity, literacy, employment and a small number of MDGs – including the – despite relatively slow economic growth, critical MDG 1 for a 50 percent reduction in while some rapid-growth countries were the share of the population in poverty − are making less progress in improving the welfare in danger of being missed. The latest poverty of their populations. Thus, the concept of estimate in 2006 indicated that, despite modest human development was created based on the recent progress, 32 percent of Mongolian central idea that economic growth is not an end households were still below the poverty in itself but only a means to an end. Growth is line, an alarmingly high proportion. Recent a vital prerequisite for development, certainly, sharp increases in a key measure of income but it only achieves its real purpose when used inequality, the Gini coeffi cient, suggest that to enhance the capacity of women and men a large share of the benefi ts of growth is to live full lives, and to enjoy good health,

3The actual increase was 176 percent. Preliminary fi gures for the fi rst 4UNDP. 1990. “Defi ning Human Development” Human Development half of 2007 show that this rapid growth in lending has continued. Report 1990.

MHDR 2007 Chapter 1 23 HUMAN DEVELOPMENT IN MONGOLIA education, the dignity that comes from having themselves to achieving four additional a fulfi lling job and the freedom to make one’s targets to the ones included in the Millennium own choices and pursue one’s own wishes. Declaration. Among them was to “Achieve full and productive employment and decent Why is it that in Mongolia today work for all, including women and young strong economic growth is not leading to the people.” The new employment target is part of anticipated impact on poverty? International Goal 1: Eradicate extreme poverty and hunger, experience has demonstrated that there is no and explicitly recognizes the central place of automatic link between economic growth and decent work in poverty reduction. A decent poverty reduction and that the expansion of work6 promotion agenda, building on existing decent work – the creation of more and better policies and international best practices, should jobs – is the key channel by which growth can be one of Mongolia’s highest priorities at this lead to rapid reductions in poverty, because time. This can spread the benefi ts of growth employment enables poor people to take more equitably and allow all Mongolian advantage of their labour power, the main women and men to realize in their lives the resource they possess5. Consultations with vision of the Mongolian Constitution, which a wide range of stakeholders in Mongolia recognizes the right of each citizen to decent have revealed a broad consensus that for employment. many men and women, economic growth is not yet fulfi lling this role: That not enough Mongolia has made remarkable employment is being created; that too many economic progress in recent years. The large of existing jobs in Mongolia today, are number of highly challenging economic, characterized by low productivity and low social and institutional development issues earnings and do not offer working conditions that the country confronted during the 1990s and adequate compensation to allow families is now largely reduced to a more manageable to rise out of poverty; that decent work core set of economic and human development opportunities are not being created in places challenges, with suffi cient resources available where poor people live; and that, in many for their solution. Thus, while today’s strong cases, Mongolian workers do not possess the economic performance is cause for celebration, skills needed to take advantage of current and it is most of all a call to action – a call for emerging employment opportunities. policymakers and broader Mongolian society to specify clear, appropriate and ambitious Box 1 development priorities for the coming decade and effectively use the abundant resources now The citizens of Mongolia are guaranteed available for achievement of those goals. to enjoy the right to free choice of employment, favourable conditions of work, remuneration, rest and private enterprise. No one shall be subjected to forced labour. Source: The Constitution of Mongolia, Article 16-4

The powerful link between poverty 6“ Decent work, as defi ned by the ILO and endorsed by the international reduction and employment generation was community, involves opportunities for work that is productive and deliv- ers a fair income; provides security in the workplace and social protec- acknowledged at the September 2005 World tion for workers and their families; offers better prospects for personal Summit, when world leaders committed development and encourages social integration; gives women and men the freedom to express their concerns, to organize and to participate in decisions that affect their lives; and guarantees equal opportunities and equal treatment for all. The Decent Work Agenda comprises four pil- 5 lars, namely: employment creation and enterprise development; social ILO, 2003. Report of the Director-General, Working out of poverty, In- protection; standards and rights at work; and governance and social st ternational Labour Conference, 91 Session 2003, Geneva and Islam, dialogue.” Source:ILO, Tool kit for mainstreaming employment and de- 2006, Fighting poverty: The development-employment link cent work, Geneva, 2007, pp. ii-iii.

24 MHDR 2007 Chapter 1 HUMAN DEVELOPMENT IN MONGOLIA

Box 2 Recommendation 1

Working out of poverty Develop a national employment Decent work is a powerful tool in strategy as a core component of the selecting the path to the attainment of the MDG-based National Development interrelated goals and human development Strategy outcomes of the Millennium Declaration. The ILO’s four strategic objectives are a • Make full and productive contemporary formulation of its mandate employment and decent work for and a development strategy that responds to all, including women and young the most urgent demands of families today. people, an important goal of the Decent work unites the international drive National Development Strategy, to wipe out poverty with the fundamental as a means to achieve poverty right to work in freedom. Within each of reduction the strategic objectives, there are tools to • Develop a National Employment help eliminate poverty. Strategy that aims to create more Employment. Poverty elimination and better jobs, including enough is impossible unless the economy decent work in areas where poor generates opportunities for investment, people are located, and to build the entrepreneurship, job creation and capacity among Mongolian men sustainable livelihoods. The principal route and women to fi ll these openings out of poverty is work. as they are created Rights. People in poverty need voice to • Ensure that macroeconomic obtain recognition of rights and demand policies and sectoral policies respect. They need representation and promote employment-intensive participation. They also need good laws that growth are enforced and work for, not against, their interests. Without rights and empowerment, the poor will not get out of poverty. 1.2 Human development in Protection. Poor people are unprotected people. The earning power of those living Mongolia: Emerging patterns in poverty is suppressed by marginalization and lack of support systems. The ILO 1.2.1 The Human Development Index is working to fi nd new ways to provide (HDI) social protection and reclaim the role of the State in this sphere. Women’s capacity to Human development is about much renegotiate the distribution of unpaid work more than the Human Development Index caring for family needs is crucial. Support (HDI). The HDI is a useful indicator for for people unable to work because of age, assessing long-term development trends illness or disability is essential. in an internationally comparable way. To Dialogue. People in poverty understand facilitate comparability and clarity, it focuses the need to negotiate and know dialogue on certain aspects of human development, is the way to solve problems peacefully. and neglects other important issues that may The ILO can offer those living in poverty be more diffi cult to compare rigorously. So, its experience in dialogue and confl ict for example, it includes income, which can resolution as a way of advancing their be measured in a fairly straightforward way, interests. We can align our agendas to incorporate the interests of the poorest. but does not include poverty, where drawing comparable lines across time and countries Source: ILO. 2003. Report of the Director is much more challenging. It includes life General, Working out of poverty, expectancy and literacy, but does not include International Labour Conference, 91st measures for some of the urgent environmental Session 2003, Geneva. issues affecting the lives of poor people around

MHDR 2007 Chapter 1 25 HUMAN DEVELOPMENT IN MONGOLIA the globe. This section of the report begins In the fi rst half of the 1990s, the with HDI trends and then discusses other Mongolian Human Development Index (HDI) core human development issues – particularly went down from 0.652 to 0.635, refl ecting poverty incidence – not captured in the HDI. the crisis accompanying the early years of transition. Since the mid-1990s, the trend has Box 3 reversed, and in the decade up to 2006 the index has risen to 0.718, as shown in Table 1.2, The Human Development Index placing Mongolia, as before, among the group (HDI) of countries with medium human development indicators. Data for 2005, reported in the 2007 Since publication of the fi rst Human Global Human Development Report showed Development Report, the human Mongolia’s international ranking in terms of development level of different countries HDI was 114 out of 177 countries. in the world has been measured with the Human Development Index (HDI). Table 1.2 Human Development Index 2005 The HDI is calculated on the basis of Mongolia’s Global rankings in HDI and all the following three basic dimensions of components human life: Indicator Value Ranking HDI 0.700 114 out of 177 • Life expectancy at birth, to Life Expectancy at birth 65.9 116 out of 177 represent the dimension of a long Adult Literacy and healthy life 97.8 25 out of 139 (%ages 15 and older) • Two variables of adult literacy rate (2/3 weight) and combined Combined primary, enrolment ratio at primary, secondary and tertiary gross 77.4 66 out of 172 school enrolment ratio secondary and tertiary levels (1/3 weight), to represent the GDP per capita (PPPUS$) 2107 134 out of 174 knowledge dimension Source: Global Human Development Report 2007 • Decent standard of living as measured by GDP per capita Mongolia’s relatively low global calculated in purchasing power ranking in HDI is primarily due to its low partity terms per-capita GDP. In purchasing power parity (PPP) terms, used for the HDI because HDI is a simple arithmetic mean of it more accurately refl ects real trends in educational attainment, health and standards of living7, Mongolian per capita income indices. income fi rst exceeded 1990 levels in 1999, and as of 2006 was nearly 60 percent higher While HDI is a useful indicator of than in 1990. However, although in the last human development, it needs to decade the real income per capita in Mongolia be supplemented by other data and has more than doubled, it still remains about careful analysis of social and economic one-tenth of the global average. processes in order to form a judgment about what is happening to the well- Mongolia’s literacy rate places it among being of people. For example, as the world’s literate nations. However, in already noted here, it does not capture Mongolia literacy rates are measured only income poverty trends. every 10 years during the population census. The most recent literacy statistics are thus Source: Government of Mongolia, UNDP, SES. 2006. Human Development 7Comparisons of post-1991 GDP with the planned economy era are no- Text Book. Ulaanbaatar. Mongolia toriously diffi cult, because prices and exchange rates then were not mar- ket-determined and had little economic meaning. PPP-based compari- sons are subject to many methodological challenges and are far from ideal, but are clearly much more meaningful than other methodologies.

26 MHDR 2007 Chapter 1 HUMAN DEVELOPMENT IN MONGOLIA from 2000 and are not as current as other Along with recovery of GDP growth, the indicators. The combined school enrolment other indicators of human development, which ratio is excellent, ranked 66 out of 172 nations. had worsened in the early years of transition, Mongolia’s global ranking in life expectancy started to turn around during the mid - to late - is almost identical to its overall ranking, which 1990s, as shown in Table 1.3. By 2004 all had is 65.9 years. surpassed the pre-transition levels, some by a signifi cant amount. Thus, school enrolment, Nonetheless, the fact that growth has which had declined from 60.4 percent to been accelerating recently – and more, that 57.0 percent during 1990-1995, rose to 79.4 it is now based on a more secure, sustainable percent in 2006, and the school dropout foundation than before – is encouraging. The rate fell signifi cantly. Similarly, the infant economy has come to rely much more on mortality rate declined from 64 per 1,000 live domestic resources than foreign savings for births in 1990 to 19 in 2006, and the maternal capital accumulation, in sharp contrast to the mortality rate, which had increased from 122 socialist period and to much of the 1990s. The to 259 per 100,000 live births during 1990- banking sector is growing impressively, and 1993, dropped to 67.2 in 2006. At the same the Government’s capital budget has increased. time, declining birth rates and a slowdown of Furthermore, as an open and largely private population growth have been accompanied sector-led economy, Mongolia has developed by a declining mortality rate, resulting in businesses that rely on competitiveness increasing life expectancy. Between 2000 and rather than state or external subsidies for 2006, life expectancy at birth increased by their survival – and that are thriving. This is 2.65 years, to 64 years. inherently a vastly more sustainable economic structure than the old one, which relied on The strong improvement in HDI in recent exporting products to captive markets. years has been aided by increasing allocation

Table 1.3 Human Development Indicators, Mongolia, 1990–2006

Combined Adult primary, Life literacy secondary GDP per Life Human expectancy Education GDP Year rate (15 and tertiary capita (PPP expectancy Development at birth index index years and gross US$) index Index (years) above), % enrolment ratio) % 1990 63.7 96.5 60.4 1,640 0.645 0.845 0.467 0.652 1992 62.8 97.7 54.3 1,266 0.638 0.824 0.424 0.626 1995 63.8 98.9 57.0 1,267 0.647 0.849 0.424 0.635 1998 65.1 96.5 62.0 1,356 0.669 0.850 0.435 0.651 1999 63.2 97.8 66.0 1,706 0.636 0.872 0.472 0.661 2000 63.2 97.8 69.6 1,783 0.636 0.884 0.481 0.667 2001 63.4 97.8 69.6 1,740 0.639 0.884 0.477 0.667 2002 63.5 97.8 69.7 1,710 0.642 0.884 0.474 0.667 2003 63.6 97.8 76.9 1,850 0.644 0.908 0.487 0.680 2004 64.6 97.8 78.0 2,056 0.660 0.912 0.505 0.692 2005 65.2 97.8 80.4 2,408 0.670 0.920 0.531 0.707 2006 65.9 97.8 79.4 2,823 0.681 0.916 0.558 0.718

*GDP for the period from 2000 to 2006 changed due to results of Establishment Census 2006. Source: NSO. Calculation for Mongolia HDR 2007

MHDR 2007 Chapter 1 27 HUMAN DEVELOPMENT IN MONGOLIA of Government expenditure to social sectors, and Table 1.5 which presents changes between reversing the trend in early years of transition. 2000 and 2006 in these indicators for each In 2006 Mongolia allocated 9.2 percent of aimag. its GDP and about one-fourth of its national budget to fi nancing of the education and The trends captured in these tables are health sectors. As presented in Table 1.4 total quite revealing when examined together. First, Government spending and expenditures in all aimags have had signifi cant improvements these two critical sectors measured in real in life expectancy since 2000, with the highest infl ation-adjusted terms exceeded 1990 levels improvements coming from two of the poorer by a wide margin in 2006. This is a marked aimags, Bayanhongor and Dornod. School change from the fi rst decade of the transition enrolment ratios are up for all aimags except era, during which real spending levels were Orkhon – the wealthiest aimag – where it far below those of the socialist era. declined by 3.12 percent from 86.41 in 2000 to 83.8 in 2006 and now is not far above Table 1.4 Central budget trends, Mongolia, 1990-2006, in infl ation-adjusted 1990 Togrogs the national average. In general, social indicators for the two wealthy urban aimags 1990 1995 2000 2006 of Ulaanbaatar and Orkhon are lower than Government those of several rural aimags, an indication revenue 5328.7 3009.6 3415.4 8938.8 (Millions of that urban-rural gaps in Mongolia, while still togrogs) present, are less extreme than they were even Percentage share six years ago. For example, Ulaanbaatar life 50.9 25.6 34.5 42.9 of GDP expectancy improved by 2.7 percent between Government 2000 and 2006, a slower pace than in 17 spending 6481.5 3072.7 4179.7 8128.0 (Millions of other aimags. Ulaanbaatar’s gross school togrogs) enrolment ratio increased by 8.9 percent in Percentage share 61.9 26.1 34.5 39.0 this period, with 15 other aimags showing of GDP Government faster improvement. spending on 578.9 426.3 447.0 653.1 health (Millions The most striking divergence was in of togrogs) GDP per capita. In the aimags of Orkhon and Percentage share 5.5 3.6 4.5 3.1 of GDP Omnogovi, both sites of signifi cant mining and Government metallurgical work, GDP per capita, measured spending on in US dollars converted at PPP exchange rates, education 1202.7 502.5 798.8 1271.0 more than doubled in these six years. Seven (Millions of togrogs) other aimags showed gains of more than 50 percent, including Dundgovi’s 75.4 percent Percentage share 11.5 4.3 8.1 6.1 of GDP improvement over the period 2001-2006. However, six aimags had gains of less than Note: The value of revenues and spending are defl ated using the CPI 10 percent, including two, Govi-Altai and Source:Authors calculation using NSO. Mongolian Dornogovi, in which per capita GDP actually Statistical Yearbooks of various years declined.

Aimag-level HDI trends Because the GDP indicator has shown by far the greatest variation across aimags, Table 1.1 above presented the HDI for all HDI rankings are largely, but not entirely, aimags for the years 1999-2006 and showed determined by GDP. Orkhon’s GDP is so that all aimags have made progress in this much higher than all other aimags that its period. Two additional tables examine aimag- HDI also is by far the highest, although in level trends in all HDI components: Table A1 life expectancy and school enrolment many in the Annex which presents the 2006 values others rank higher. Ulaanbaatar’s HDI ranking for HDI and its components for all aimags, is second, and Omnogovi’s is third, again

28 MHDR 2007 Chapter 1 HUMAN DEVELOPMENT IN MONGOLIA

following their place in the GDP ranking. The Selenge 3.79 15.95 36.64 6.82 next three aimags in terms of HDI – Govi- Bayan- 6.69 22.94 4.32 6.65 Sumber, Dundgovi and Sukhbaatar − have khongor Govi- 2.79 7.20 53.00 5.90 per-capita GDPs a clear notch higher than sumber the remaining aimags. It is only after that, Khovd 3.92 19.14 14.53 5.38 among aimags with per capita GDP bunched Ulaan- 2.69 8.94 45.27 5.37 between US$1,400 and US$1,600, that other baatar indicators have a signifi cant impact on overall Tov 3.87 2.95 38.09 5.26 Ar- rankings. Then, at the bottom of the rankings, 3.98 19.22 7.73 4.98 khangai the poorest aimags are also the ones with Khovsgol 4.18 19.38 2.28 4.72 lowest HDI, although their ranking among Khentii 3.90 8.10 14.70 4.27 themselves does not exactly track their GDP. Dorno- 3.92 19.22 -5.35 3.72 govi Govi- Looking at the changes in HDI over 3.97 12.89 -2.08 3.46 this period, it is striking that Ulaanbaatar’s Altai improvement of 5.4 percent was considerably Bulgan 2.43 4.21 4.68 2.06 *Gross enrolment ratio refers to combined primary, lower than the national average, despite secondary and tertiary ratio. Time period for Dundgovi its relatively strong GDP growth. Even aimag is 2001-2006. Orkhon, with per capita GDP more than Source: Authors calculation using NSO data doubling, was only ranked ninth in terms 1.2.2 Poverty trends since 1991 of HDI improvement, due primarily to poor performance in the school enrolment ratio. Although it is an important and useful Just as Mongolia’s global HDI ranking is measure of broader long-term development pulled down by its relatively low GDP, ranking trends in a country, the HDI relies on indicators of aimags shows that the non-income human such as literacy rate, life expectancy and development indicators are stronger in many total school enrollment ratios in assessing poorer rural areas than in the wealthy urban overall development trends. Literacy and aimags. life expectancy are stock variables heavily Table 1.5 Changes in HDI and its indicators determined by past developments and by aimags and city, Mongolia, 2000-2006, only change slightly even if one year’s (Sorted by rate of change in aimags and city developments are dramatic, resulting in a HDI, in descending order)* tendency for the HDI to change slowly. As an Life Gross GDP per example, the relatively modest nature of the expec- HDI, enrolment capita* Aimags tancy at % decline in HDI between 1990 and 1995 was ratio (% (% and the birth (% change change change largely as a result of continued high literacy Capital change since since since rates and life expectancy, themselves a legacy since 2000 2000) 2000) 2000) of the human capital built during the socialist National 4.19 14.08 58.33 7.65 era. During that period the HDI did not capture Uvs 4.11 33.69 68.99 11.07 the extent of the trauma that was experienced Ovor- 3.99 32.28 68.14 10.41 by the Mongolian population at the outset of khangai the country’s transition to a market economy, Omno- 2.43 19.43 112.23 9.85 govi and in the aftermath of the abrupt end of Soviet Zavkhan 3.95 27.52 51.73 9.21 fi nancing that had previously amounted to 8 Dornod 6.64 15.44 43.65 8.91 about one-third of GDP . Bayan- 2.35 17.50 69.58 7.81 Olgii The seriousness of the social crisis that Dundgovi 2.13 14.67 75.39 7.68 the Mongolian people experienced in the fi rst Sukh- 3.72 26.50 38.57 7.68 years of the transition was quantifi ed most baatar strikingly in 1996, when results of the fi rst Orkhon 3.92 -3.12 117.02 7.19 Darkhan- 3.92 8.63 50.99 6.99 8Mongolia Human Development Report 2003 and 1997 for more detailed Uul discussions of the events and socioeconomic trends of those years.

MHDR 2007 Chapter 1 29 HUMAN DEVELOPMENT IN MONGOLIA

Mongolian Living Standards Measurement with the rural headcount of 43.4 signifi cantly Survey conducted in 1995, were released. larger than the urban headcount of 30.3. If the These revealed that 36.3 percent of the poverty line were raised by 25 percent, the Mongolian population – or 828,000 people poverty rate would have reached 51 percent in – were in poverty, and that considerably more 2002, indicating that a large number of people were above but in precarious proximity to the were only marginally non-poor, still living poverty line. That survey established a Gini just above the poverty line. coeffi cient for income distribution of 0.31, refl ecting low levels of income inequality and a large bunching of households below and Box 4 around the poverty line. Although no comparable “Urban” and “rural” – the offi cial surveys were conducted during the socialist defi nitions era, there has been little doubt that poverty was either nonexistent or extremely rare during the In all offi cial Mongolian statistics the late 1980s. The emergence in fi ve years of a word “urban” refers to: Ulaanbaatar, all massive poverty crisis was the clearest and most aimag centres and 29 urban-classifi ed serious refl ection of the traumatic impact of the villages so designated because of their transition on the lives of the Mongolian people. size and non-agricultural economies. The word “rural” refers to: all soum By the late 1990s Mongolia had centres, except any that are also established a private sector-led economy aimag centres, and all rural areas or with a greater degree of competition and settlements other than the 29 urban- more broad-based ownership of assets, all of classifi ed villages. which helped overcome the economic decline of the initial years of transition and stabilize Source: NSO. 2000 Population and the economy. Human development indicators Housing Census: The main results. started to climb slowly and as of 1999 the HDI had matched its 1990 level. However, the 1998 Living Standards Measurement Survey The most recent data, not based on full (LSMS) determined that the number of poor household Living Standards Measurement people had increased slightly to 850,000, Surveys and therefore not strictly comparable even though in percentage terms this refl ected with the earlier studies, indicate a drop in a slight decrease in poverty incidence to poverty incidence to 32.2 percent as of 2006, 35.6 percent. By this time it was clear that with slight improvements in the poverty gap poverty had become Mongolia’s greatest and poverty severity as well. These modest social challenge, and a new fact had emerged: improvements are mildly encouraging, but the that economic growth under Mongolia’s new most striking implication is that despite strong market system was not suffi cient in and of economic growth since 2004 and sustained itself to ensure reductions in poverty levels. increases in the HDI, income poverty – fi rst The third LSMS conducted in 2002-2003 estimated at 36.3 percent in the Living in the aftermath of the three dzud, was further Standards Measurement Survey of 1995 – has evidence of the depth and intractability of stayed at roughly the same high level for a Mongolia’s poverty crisis. That survey found decade. a poverty incidence of 36.1 percent, virtually Clear reasons exist why the link between unchanged from 1998.9 Not surprisingly, the GDP growth and poverty reduction has been impact of the harsh winters was refl ected in so tenuous. First, throughout the transition era, a shift of poverty from urban to rural areas, growth has been accompanied by widening inequalities, as has been the universal 9The fi ndings of the fi rst three LSMS reports, in 1995, 1998 and 2002- 2003 were not strictly comparable because of methodological differenc- experience in moving from a socialist planned es in the surveying work. However they can be used as a rough indicator economy to a market-based economy. While of underlying trends.

30 MHDR 2007 Chapter 1 HUMAN DEVELOPMENT IN MONGOLIA

Mongolia’s income inequality measures are to men. According to the Global Human not yet severe by international standards, this Development Report 2006, Mongolia’s trend, if not reversed, is certain to ensure that international ranking in terms of GDI was the benefi ts of economic growth are not shared 87 out of 136 countries, and its ranking in equally by all income groups. Secondly, for terms of GEM was 65 out of the 76 countries much of the last 15 years the re-distributional for which this index could be calculated. role of Government spending during the transition era was undercut by inadequate Figure 1.1 HDI, GDI and GEM Indices, fi scal resources. Third, growth in the livestock Mongolia, 2000−2006 sector has generally taken the form of an increase in herd size, which is calculated as GDP growth in the form of production of animal “inventories.” In recent years the distribution of livestock among herding households has become increasingly unequal, with a rapidly growing number of households with large herds and a continued signifi cant number of households with herds too small to support acceptable living standards. Fourth, growth that is primarily produced by the capital-intensive mining sector is far less likely to have a broad impact on poverty reduction than growth originating from more labour-intensive service, manufacturing and agricultural production. Much of Mongolia’s recent growth, particularly in industry, has Source: NSO, Calculation for Mongolia HDR 2007. been generated by the mining sector. In 2006, the value of the GDI in Mongolia This report argues that the persistence was estimated at 0.719, almost exactly the of poverty in Mongolia owes a great deal to same as the HDI for that year (Figure 1.1). the failure of the growth process to generate This would appear to indicate the absence remunerative employment opportunities in of any serious discrimination against women suffi cient quantity and of adequate quality. in Mongolia. But this picture is not entirely Much of the report is devoted to exploring accurate, though it is undoubtedly true that the the linkages among growth, employment and extent of gender discrimination in Mongolia poverty in Mongolia, with a view to drawing is less compared to many lower and middle- lessons for policy. income countries.

1.2.3 Gender development indicators Looking separately at the three components that together constitute the GDI, While HDI measures progress in human one fi nds that women are disadvantaged in development of a population as a whole, some areas but not in others. Compared to two separate indices are used to measure male life expectancy of 62.6 years, female more specifi cally the progress in reducing life expectancy in Mongolia was 69.4 years gender discrimination. One is the Gender in 2006. The proportion of the children and Development Index (GDI), which measures youth aged 7-22 attending school was 75.5 development along the same three dimensions percent for males compared to 83.2 percent for as the HDI but only for women, to allow females. The PPP-adjusted per capita incomes comparisons with men. The other is the of men and women were US$3,045 and Gender Empowerment Index (GEM), which US$2,611 respectively. Thus, while women measures women’s status in society relative generally have better social indicators, they lag

MHDR 2007 Chapter 1 31 HUMAN DEVELOPMENT IN MONGOLIA behind signifi cantly in the economic sphere. problem, the Parliament’s 2005 Resolution on No systematic data exist on differences in the the MDGs in Mongolia set specifi c targets for poverty of women and men, but as seen in increasing the proportion of female candidates Table 1.7, the 2002-2003 HIES/LSMS found nominated for the National Parliament, at that female-headed households are far more 20 percent in 2008 and 35 percent in 2012. likely to be in poverty than households headed The revised Mongolian Law on Elections to by men. A total of 43.8 percent of households the Parliament approved in 2005, took this a headed by women fell under the poverty step further by mandating that not less than line, while only 34.8 percent of male-headed 30 percent of the parliamentary candidates of households were poor. The gap between all parties and coalitions must be women. But male- and female-headed households was the quota was removed by the Parliament in particularly large in urban areas. Moreover, December 2007 before the revised law was women work longer hours than men, given that implemented. families rely more on subsistence production and casual employment to meet household Other indicators, such as working needs.10 conditions, wages and especially the situation Table 1.6 Poverty incidence by sex of the of unpaid labour, also point to the existence household head and urban-rural divide, of considerable disparities between men and Mongolia, 2002-2003 women. These are analyzed in greater detail in Chapter 4.11 Male Female Headcount 1.2.4 Disparities in human Urban 27.9 41.6 development: Inter-regional Rural 42.8 48.4 differences are moderating, but intra- National 34.8 43.8 urban and intra-rural inequalities Share of population have increased sharply Urban 82.5 17.5 Rural 89.9 10.1 Although Mongolia’s Human develop- National 85.8 14.2 ment index has risen in recent years, the Share of poor improvement has been accompanied by Urban 75.9 24.1 signifi cant disparities in human development Rural 88.7 11.3 across and within urban and rural areas, National 82.8 17.2 regions and social groups. There have been Source: NSO, WB, UNDP. 2004. HIES/LSMS 2002-2003. some encouraging trends in terms of inter- regional gaps. As we have already noted, The gender empowerment index (GEM) improvements in the HDI have been broad- 0.42 indicates that women also lag behind in based in geographical terms, with impressive terms of participation in economic and political increases occurring across the entire country. life and in decision-making processes. While However, despite the fact that inter- women’s participation in formal employment regional inequality has been shrinking, overall remains high, the proportion of women inequality levels have increased sharply, a elected to the national Parliament dropped highly disturbing trend. Table 1.7 shows trends from 25 percent in 1990 to 12 percent in 2000 in inequality across the country and within and just 7 percent in 2004, a trend refl ected regions and sectors.12 Calculations are based at all levels of political decision making. on consumption trends, a more meaningful Evidently, very few women participate in measure of living standard than income. We key decision-making forums, even though equal rights of women are guaranteed under 11For a recent comprehensive review of the gender gap in Mongolia, see the 1992 Constitution. In recognition of this ADB and World Bank (2005). 12The Gini coeffi cient is an important indicator of inequality, with a val- ue of 0 indicating perfect equality and 1 indicating complete inequality. 10Various dimensions of gender discrimination in employment in Mon- Higher values indicate a greater degree of inequality. See the Technical golia are discussed more fully in Chapter 4. Notes.

32 MHDR 2007 Chapter 1 HUMAN DEVELOPMENT IN MONGOLIA see that between 2003 and 2006, the period Mongolia’s level of inter-regional in which the Mongolian GDP grew rapidly, disparity is also large, but compares favourably a very large increase occurred in national with many other developing countries in inequality, as well as intra-urban and intra-rural similar circ*mstances. Table A2 and Table inequality. While the rise in inequality was A4 in the Annex present the national HDI slower in the Western and Khangai regions, and and maximum and minimum provincial HDIs in Ulaanbaatar, it was large in all areas. for Mongolia and several other countries. Table 1.7 Inequality trends, 1998, 2002–2003 The statistics show that in Mongolia the 1.25 and 2006, GINI coeffi cient for consumption, ratio of highest to lowest aimags in HDI, Mongolia and the ratios for all three HDI components, Regional coverage 1998 2002-2003 2006 are substantially lower than these numbers in the Philippines (1.56) and China (1.55), National average 0.350 0.329 0.380 and closely track the gap in Kazakhstan, Urban 0.331 0.386 suggesting that inter-regional disparities are Rural 0.313 0.360 not unusually high by international standards. Region The inter-aimag gap in the school enrolment West 0.306 0.342 index in Mongolia is the lowest among all Khangai 0.320 0.354 four countries. Central 0.314 0.393 East 0.317 0.399 Despite recent improvements, however, Location rural-urban disparity is still quite pronounced Ulaanbaatar 0.332 0.367 in Mongolia. According to the most recent Aimag centers 0.324 0.389 living standards survey, the magnitude of Soum centers 0.318 0.373 poverty in 2002-2003 was 43.4 percent in rural Countryside 0.309 0.346 areas compared to 30.3 percent in urban areas. Source: NSO, WB, UNDP. HIES/LSMS 1998, 2002-2003; This marks a reversal of the fi ndings of the Mongolian Statistical Yearbook 2006. 1995 and 1998 LSMS reports, both of which found that urban poverty was signifi cantly This suggests an alarming division higher than rural; in 1995, this was by 38.8 of Mongolian society into those who are to 33.1 percent, and in 1998 by 39.4 to 32.6 benefi ting from growth and those who are not; percent. a bifurcation that cannot be easily categorized as a rural-urban gap, or an inter-regional gap, The urban-rural gap worsens with but one occurring in both urban and rural areas distance from Ulaanbaatar. This is illustrated and in all regions of the country. These data, in Figure 1.2, which presents the poverty rate, in conjunction with continuing high levels of population and distance from Ulaanbaatar for poverty, refl ect the existence of a substantial the fi ve regions of the country: Ulaanbaatar, portion of the Mongolian population, the East, the Centre, the Khangai area and the estimated at more than 30 percent of the total Western region. The horizontal axis shows the in every survey for more than a decade, who average distance from Ulaanbaatar of all aimag are trapped in poverty and not benefi ting from centres in each region, in kilometres, while the positive economic developments. Such a vertical axis measures the share of the region’s trend has signifi cant policy implications, and population living below the poverty line. It can this report will recommend an employment- be seen that greater distance from the capital is based poverty reduction agenda to foster directly correlated with higher poverty rates. greater equity. While the current national Gini The size of each globe represents the size of coeffi cient of 0.38 is not high by international that region’s population. standards, further widening of these gaps as economic growth continues will place Mongolia among the group of countries with serious inequality problems.

MHDR 2007 Chapter 1 33 HUMAN DEVELOPMENT IN MONGOLIA

Figure 1.2 Poverty headcount by distance of Urban poverty became particularly acute regions from Ulaanbaatar, Mongolia, 2002- as a result of these trends. While most people 2003 in rural areas were able to meet subsistence needs, urban dwellers often faced a greater challenge. During this time rural households transferred meat and other animal products to relatives and friends in the city. All this changed, however, during the harsh winters 51.1 of 2000-2002, when 11.2 million livestock died, making rural life in turn an untenable proposition for many people. While the 38.7 enormous loss of livestock from harsh winters 34.4 34.5 inevitably accentuated rural poverty, gradual

30 revival of manufacturing and service sectors

27.3 in urban areas made urban poverty less 25 acute, thereby reversing the poverty rankings between rural and urban Mongolia.

1.3 Millennium Development Goals in Mongolia

Source: NSO, WB, UNDP. HIES/LSMS 2002-2003. Mongolia’s commitment to all-round human development has been reaffi rmed Although the earlier surveys are not by its endeavour to realize the Millennium strictly comparable with the most recent one, Development Goals (MDGs). In addition to the worsening of rural poverty relative to urban the eight global goals, the Government has is consistent with trends in the urban and rural committed to achieve a national Millennium economies. In the fi rst years after the end of the Development Goal 9 on human rights planned economy, hardships were widespread and democratic governance. Overall, the and affected virtually all groups, but the worst Government has set 22 targets to be achieved shock resulting from economic disruptions by 2015. Many are achievable, especially was borne by the urban population, particularly those in the spheres of maternal and child those in aimag centres, as jobs in the heavily health and gender equality. subsidized crop agriculture, manufacturing and Government sectors disappeared in large The Mongolia MDG report 2007 numbers while new sources of income emerged identifi es the following progress on key more slowly. The impact on urban households indicators: was compounded by high infl ation from Group 1: MDGs targets achieved early: 1991 to 1997, as infl ationary macroeconomic conditions combined with price liberalization • Ratio of girls to boys in secondary to make it diffi cult for some urban households schools to obtain adequate supplies of basic foodstuffs. • Percentage of children covered by Although the population of Ulaanbaatar has measles immunization rose steadily throughout almost the entire • Infant mortality rate transition period, the urban population in • Under-5 mortality rate other aimags plunged, as shown in Figure A1 in the Annexes. The greatest declines occurred Group 2: MDGs target indicators in in crop-producing aimags, such as Selenge, “likely to achieve” category: where urban population fell from 53.7 percent • Percentage of underweight children in 1989 to 33.2 percent in 2006. • Ratio of girls to boys in primary school

34 MHDR 2007 Chapter 1 HUMAN DEVELOPMENT IN MONGOLIA

• Percentage of women nominated to the itself, is proving a daunting task. The results national Parliament of the 2007 Living Standards Measurement • Maternal mortality ratio Survey, now being conducted, will provide • Percentage of birth deliveries attended important evidence regarding prospects for by skilled health care personnel achieving MDG 1. Even if the new fi ndings • Death rates associated with are positive, the task will require Mongolia to Tuberculosis reduce the population share of poor people by • Percentage of Tuberculosis cases approximately 6.7 percent every year during diagnosed and treated under DOTS13 the next decade. Even assuming that economic • Carbon dioxide emission (tonne/ growth will have strong poverty impact, this person) would require a GDP growth rate of at least • Percentage of protected land area 9–10 percent per annum, sustained over a • Percentage of population with access to decade. But, as noted above, current trends safe drinking water toward widening inequality indicate that the impact of recent growth on poverty is neither Group 3: MDGs targets in “slow” high nor increasing. category – achievement will be possible, but diffi cult: 1.4 Decent work and human • Poverty level development • Ratio of female to male students in higher education Widespread global awareness of the • Percentage of population using adequate inherent importance of decent work in human sanitation facility development now exists: that decent work in and of itself is an important aspect of human Group 4: MDGs target indicators in development, not merely because of the “regressing” category – achievement unlikely income it generates, but also because it is a without major change in trends: basic part of achieving fulfi lment and dignity. • Net enrolment in primary education Women and men with decent jobs are more • Proportion of children starting grade 1 satisfi ed with their lives and more able to reaching grade 5 continue to expand their capabilities. Like a • Literacy rate among youth aged 15-24 basic education and good health, decent work • Share of women in wage employment should be seen as a core component of a good in the non-agricultural sector life and a fundamental right. • Percentage of women elected for A prerequisite for employment-based national Parliament poverty reduction in Mongolia will be stronger • Incidence of Tuberculosis investment in the capabilities of people so • Percentage of land area covered by that they can not only contribute to but also forest take full advantage of the opportunities This mixed picture refl ects the extent that arise during development. Without of the challenge that Mongolia still faces in education, training and health, Mongolia’s MDG achievement. The relatively slow pace poor and vulnerable will be unlikely to be of poverty reduction in Mongolia has already able to rise out of poverty, even if the overall been discussed in this Report. Achieving the economy is growing rapidly. While there is targeted 50 percent reduction in the share of now considerable private spending in these poor people, along with the additional target sectors, at this stage of development Mongolia of a 25 percent reduction in the share of very must still depend on the Government to take poor households that the Government has set principal responsibility for expenditures on basic services such as compulsory education 13DOTS is the acronym for “Directly observed Therapy Strategy”, and primary health care, particularly to ensure and refers to the delivery of every dose of medication by a health care worker. that low-income groups have access to these

MHDR 2007 Chapter 1 35 HUMAN DEVELOPMENT IN MONGOLIA services. A high priority should be accorded had no doctors, and an additional 77 soums to targeting spending on education, training in 19 aimags had an inadequate number of and health in poor areas, which will offer doctors. The percentage of ambulances that social benefi ts and economic returns in terms of failed to meet national standards and were poverty reduction and a productive workforce. no longer serviceable were 35 percent at the soum level and 39 percent at the aimag level15. There are clear warning signs that the The rural poor often cannot afford to travel accelerated growth of recent years is leaving for medical treatment to urban areas where behind a signifi cant number of Mongolian services are available. As a result, their access people, particularly in eductaion and and that to quality health services is extremely limited, further Government action is urgently required as illustrated in Box 5. to reverse this trend. For example, according to the School-to-Work Transition Survey, Box 5 conducted by the National Statistical Offi ce with ILO support in 2006, 3.3 percent of The rural poor are seriously young people aged 15–29 had not completed disadvantaged in securing access to primary education, with a much larger share health services (6.4 percent) in rural areas. “When there is a need for medical School dropouts are at risk of becoming attention, fi rst you have to call and child labourers who may be denied a normal get a checkup by the bagh nurse. To childhood and human capital needed to bring the bagh nurse you need to travel fi nd productive employment at a later age, at least 1-2 hours by horse. The bagh thus perpetuating the cycle of poverty. The nurse has no vehicle, so has to ride back Government’s MDG Report 2007 has noted a with you. Based on her diagnosis, if worsening in the number of children who are you need emergency services from the failing to complete Grade 5. According to the soum centre you have to travel another National Statistical Offi ce, the school dropout 4 hours on horseback. By this time the rate increased in 2006. patient’s condition may have worsened. If the bagh nurse doesn’t give a referral, Higher dropout rates in rural areas refl ect the soum emergency services won’t a number of factors, including higher poverty come. If the patient’s family insists, leading to pressures on children to work; the they have to pay the cost of transport ease with which children can be employed both ways.” in livestock herding; and the gap in quality Source: NSO and World Bank 2001, between urban and rural schools in terms of Participatory Poverty Assessment. instruction and facilities. Studies show that student performance is lower in soum schools than aimag centres, and weaker in poorer While closing these rural-urban service soums than richer ones measured in terms of gaps should be an important part of expanded poverty incidence.14 investment in human development, urgent attention also must be given to the problems Similar problems exist in rural health faced by the population in ger areas in and care provision. Most doctors and hospital around urban centres, especially Ulaanbaatar. beds are located in large urban areas or aimag A 2004 report on conditions faced by internal centres. Soum and smaller administrative units migrants in Ulaanbaatar noted a number of in remote areas frequently lack resources to large development gaps between ger-area provide quality medical services. One 2001 residents and apartment dwellers, including: survey revealed that 44 soums in 15 aimags

14The World Bank. 13 April 2006. Mongolia Poverty Assessment, Report No. 35660-MN, Poverty Reduction and Economic Management East Asia and the Pacifi c Region, p. 41. 15Ibid.

36 MHDR 2007 Chapter 1 HUMAN DEVELOPMENT IN MONGOLIA

• Poverty incidence in Ulaanbaatar’s ger areas was 47 percent, compared to 16 Recommendation 2 percent among the capital’s apartment Expand investment in human dwellers development • The share of school dropouts aged 7- • Reduce the urban-rural gap in core 18 in Ulaanbaatar from ger areas was public services such as education, 86 percent. School attendance rates for health, sanitation and water apartment dwellers were higher than in • Reduce the public service gap within ger areas at all ages. urban areas between ger population • The number of ger-area households that and other residents use insecure water sources was 30 times • Increase the targeting of expenditures higher than among apartment dwellers, for education, training and public and almost all ger-area residents (97 employment services and health care percent) use pit latrines instead of on poor populations being left behind improved sanitation.16 in the development process especially rural areas and ger districts 17 A draft study of UN-Habitat of living • Reduce or eliminate fees charged to conditions and policy options for upgrading poor people for core public services, Ulaanbaatar’s ger areas notes that although the such as health care and education area of these settlements is expanding rapidly • Continue to increase Government – and more than 50 percent of Ulaanbaatar’s spending on human capital including population lives in gers – there has been support for vocational education and little public investment in infrastructure training development and basic public services to ger residents over the last fi ve years. 1.5 Moving forward – An Large proposed increases in spending employment-based poverty for education and health in the draft 2008 budget are very encouraging. But attention reduction Agenda for Mongolia must be paid to ensuring that these additional expenditures are targeted where most needed One way Mongolia can approach the – in rural areas and in poorer urban areas MDG poverty reduction target is to reorient with essential services accessible to the the growth process such that the growth poorest groups. Without strong and sustained elasticity of poverty reduction improves increases in Government investment in human considerably. This requires attention not only development, the recent trends toward rising to the rate of growth but also the pattern of inequality with a large pool of poverty-stricken growth – in particular, it requires conscious households will be diffi cult to reverse. pursuit of a pro-poor growth strategy. Because poor people earn their livelihoods mainly by contributing their labour services, a pro- poor growth strategy necessarily calls for special focus on the creation of remunerative employment opportunities for women and men living below the poverty line. Employment is thus the crucial nexus that links economic growth to poverty reduction. This is the role of decent work that is embodied in the new

16Government of Mongolia. UNDP. PTRC. 2004. Urban Poverty and MDG Decent work target under MDG 1, In-Migration Survey Report, Ulaanbaatar. Mongolia. which makes full and productive employment 17UN-Habitat Regional Offi ce for Asia and the Pacifi c. September 2007. for all a key component of the global poverty “Ger Area Upgrading Strategy of Ulaanbaatar City,” draft paper, Fu- kuoka, Japan. reduction agenda.

MHDR 2007 Chapter 1 37 HUMAN DEVELOPMENT IN MONGOLIA

What specifi cally should be done to If the Government is prepared to make allow more of Mongolia’s people to share in a strong commitment to orient public policy the benefi ts of economic growth? According and budget spending toward employment- to the analysis of S.R. Osmani, the three based poverty reduction, conditions are in key factors that determine the strength of place for major achievements. The fi nancial the linkages between growth and poverty resources at the Government’s disposal are reduction are what might be called the growth far greater than at any time since 1990, with factor, the elasticity factor and the integrability the new 2008 budget proposed to Parliament factor.18 The growth factor refers to the need projecting that expenditures will equal 2.6 for economic growth; the elasticity factor trillion Togrogs, more than four times the size refers to the extent to which any particular of 2003 expenditures. Policy should be based growth process is able to generate suffi cient on a review of the National Employment Law quantity and quality of employment. The adopted in 2001 and amended in 2007, the critical integrability factor refers the extent National Employment Promotion Programme to which poor people possess the capacity approved in 2002, the Informal Economy Policy to integrate fully into the workings of an and Plan approved in 2006, and the National expanding economy. Plan of Action for Decent Work (2005−2008). There is also valuable international experience In Mongolia today, the need for economic to draw upon, which has demonstrated clearly growth is being met and seems likely to that policies matter – Governments that focus be sustained. From the perspective of the on employment generation and decent work elasticity and integrability issues, however, can have an enormously positive impact on the there are several important factors that should lives of their people. Mongolia’s very strong be considered in policymaking: budget position, and prospects for continued 1. The number of jobs being created economic growth and robust fi scal conditions, – Is there enough job creation for offer options to policy makers that were not new entrants to the labour market, present even fi ve years ago. for those currently unemployed or underemployed, and for those moving from rural to urban areas? Box 6 2. The quality of jobs being created − Do National Plan of Action for Decent they offer job security and a sustainable Work in Mongolia (2005−2008) path out of poverty for poor families? Is the level of real earnings high enough The National Plan of Action for Decent to support decent lives for workers and Work was adopted in 2005 by the their families? Ministry of Social Welfare and Labour, the Mongolian Employers’ Federation 3. The location of jobs being created – and the Confederation of Mongolian Are employment opportunities opening Trade Unions. The plan links outputs, where workers, and specifi cally poor identifi es funding and includes indicators people in search of work, are able to to promote decent work through: (i) access them? ensuring basic human rights and labour 4. The capacity of Mongolia’s working- rights to improve employment and social age population to engage in productive security; (ii) increasing jobs and incomes work – Do women and men have in all sectors; (iii) implementing social the education, experience, training insurance schemes; and (iv) developing and sound health necessary to take mechanisms for social dialogue. advantage of new opportunities that are Source: Government of Mongolia. present? 2005. Action Plan on Decent Work

18A fuller discussion of conceptual issues involved in such a strategy can be found in Osmani (2006).

38 MHDR 2007 Chapter 1 CHAPTER 2 Employability – A bridge between human development and employment

MHDR 2007 Overview 39 EMPLOYABILITY

Employability – A bridge be- had fi nished at least lower secondary school tween human development and (Grade 8). However, considerable differences exist in rates of enrolment and completion employment according to geographical area and quintile groups based on household poverty, with gaps Employability refers to the capacity between rural and urban areas, remote areas of men and women to obtain and retain and the capital, and rich and poor19. employment, and encompasses a range of skills, knowledge, personal attributes and Yet a key challenge is a skills mismatch attitudes. It is a bridge between human between human capital, in the form of development and decent work, because it education, skills and experience of the labour deals not with the economics of stimulating force, and the demands of the labour market. new demand for labour, but rather with the A number of factors have contributed to this capacity of women and men to obtain and hold mismatch. Some children still drop out of jobs that provide income and dignity, allowing school. Studies show that the likelihood of them to meet their families’ basic needs and dropping out is linked to household poverty, to ensure that their children are given the geographical area and family background. childhood and education that will enable them Boys in rural areas are more apt to leave to avoid the risks of poverty. This chapter school than girls. Children in poor households opens with an analysis of trends in education are more likely to drop out than those from and training, two essential components of non-poor households. It appears that the any employability agenda, identifi es areas of dropout rate increased during the 2006-2007 concern, and proposes options for overcoming school year. However, these statistics should those problems. A critical issue is the weak be interpreted with caution, since they may link between the skills and knowledge that refl ect the fact that re-enrolment or non- employers actually demand and those that enrolment of migrant children is not fully workers obtain from their education and captured. vocational training. Another employability challenge relates to expectations of job seekers Table 2.1 Gross enrolment rates and drop about the labour market and the attitudes that outs, Mongolia, 2003-2007 prevent workers from performing effectively. 2003- 2004- 2005- 2006- The chapter concludes with a discussion of Indicators 2004 2005 2006 2007 a different but very serious employability Gross enrollment rates challenge in Mongolia today: high incidence (percentages) of alcohol abuse, which both limits the ability Generel 98.0 97.6 92.3 93.7 of unemployed to obtain employment and education also undermines their performance when they Primary 103.5 102.4 93.3 93.5 do fi nd jobs. education Secondary 93.1 93.4 91.2 93.8 2.1. Education and training education Number of Education and training are logically drop-outs per linked to employment and poverty. Legacies thousand of the socialist system are high levels of adult Total 12.0 10.8 9.0 12.3 literacy and educational attainment. Although Of which 4.9 4.3 3.6 4.8 ground was lost during the early years of female the economic transition, levels of education Drop-out 2.3 2.0 1.6 2.2 and literacy have now reached new highs. ratio According to the HIES/LSMS 2002-2003, Source: NSO. Mongolian Statistical Yearbook, 2006. only 1 out of 20 adults had not completed 19WB. 13 April 2006. Mongolia Poverty Assessment, Report No. primary school and more than 8 out of 10 35660—MN, Poverty Reduction and Economic Management East Asia and the Pacifi c Region, p. 36.

40 MHDR 2007 Chapter 2 EMPLOYABILITY

The fact that there are still children who next generation to improve their situation in are “uneducated” also is striking. As noted in life. The analytical report on the 2006 School- Chapter 1, according to the School-to-Work to-Work Transition Survey provides strong Transition Survey by the National Statistical evidence that family background affects Offi ce in 2006, 3.3 percent of young people the educational attainment of children in aged 15–29 had less than a primary education, Mongolia. Statistical analysis of multiple with a much larger share (6.4 percent) in rural regressions shows that the decision to stay in areas. For Mongolia as a whole, the fi gure for school is positively affected by the education boys (4.6 percent) was twice that for girls (2.1 of parents. This suggests that, despite a percent)20. Of these, reasons for dropping out number of initiatives to address the issues, included the desire to work (2.3 percent) and opportunities for education are not being taking care of livestock (26.6 percent). Another spread evenly across girls and boys from 9 percent left school for economic reasons different backgrounds, with children in rural that may include both the direct expenses and areas least likely to move out of low education, opportunity costs of continuing education. The low productivity and low earnings22. percentages of dropouts leaving education to take care of livestock also increased with Findings from the 2006 participatory age: 20 percent for those aged 15-19, and 30 poverty assessment support the view that percent for those aged 20-29. Without decent some families have diffi culties sending their work made possible through a basic eductaion children to school due to both direct costs school dropouts are highly likely to perpetuate such as informal fees, school supplies and a cycle of poverty. the for the income that the children could add through work to family income. The Table 2.2 Reasons for dropping out of school assessment pointed to a number of factors for those classifi ed as uneducated young people that increase the risk of dropping out of aged 15–29 years by sex, Mongolia, 2006 school. Migration can lead to a situation in Reasons for leaving which families and children lack registration Total Male Female school papers needed for school enrolment. Other Failed examinations 2.7 2.6 3.3 issues relate to access and conditions at school Did not enjoy school 26.6 26.5 26.7 such as distance, discrimination, dormitories, Disliked school 2.3 3.4 0.0 overcrowding, equipment and supplies. Girls Wanted to work 2.3 2.6 1.7 and boys with disabilities face special problems related to access23. Parents did not allow 6.8 3.4 13.3 to continue in school Children and youth in the countryside Economic reasons 9.0 11.1 5.0 encountered problems of access that Take care of livestock 26.6 28.2 23.3 accompanied the reform of education in Other reasons 23.7 22.2 26.7 Mongolia. According to policies introduced Total 100.0 100.0 100.0 after 1997, the system was reorganized to Source: Francesco Pastore. June 2007. School-to-Work close small bagh schools, discontinue Grades Transition. ILO Working paper. Draft. 9 and 10 in soum schools, and merge schools in cities and aimag centres. The result was The educational attainments of parents that Grades 9 and 10 were no longer available and children are positively correlated21. Thus, in rural areas, with reduced spaces in aimag there is a risk that the cycle of poverty will be schools. Entrance into Grade 9 is based on continued over generations, whereby children examinations taken in Grade 824. whose parents are poor and uneducated drop out of school, making it more diffi cult for the 22Francesco Pastore, June 2007. School-to-Work Transition. ILO work- ing paper, Draft. 20 Francesco Pastore, June 2007. School-to-Work Transition. ILO Work- 23NSO of Mongolia, ADB and WB. 2006. Participatory Poverty Assess- ing paper, Draft. ment Mongolia, Ulaanbaatar. 21WB. 13 April 2006. Mongolia Poverty Assessment, Report No. 24WB. 13 April 2006. Mongolia Poverty Assessment, Report No. 35660- 35660—MN, Poverty Reduction and Economic Management East Asia MN, Poverty Reduction and Economic Management East Asia and the and the Pacifi c Region, p. 39. Pacifi c Region, p. 38.

MHDR 2007 Chapter 2 41 EMPLOYABILITY

In addition to affordability and access, Data from the Labour Force Survey problems may relate to the quality of basic indicate that most of those unemployed in education. Studies show that student performance, 2002-2003 had an educational attainment of and presumably classroom preparation, is worse either incomplete secondary (33.5 percent) in soum schools than aimag centres and weaker or completed secondary (31.6 percent). The in poorer soums than richer ones measured in corresponding fi gures for females were 28.2 terms of poverty incidence25. percent and 35.3 percent respectively. However, these statistics, presented in Table 2.4, partially Other concerns include the type refl ect the overall pattern of educational and relevance of education. International attainment and do not show unemployment experience shows that basic education is rates at each level of educational attainment. crucial for lifetime learning and employment Data from the School-to-Work Transition opportunities. It is essential to have basic Survey indicate that, among young people workplace skills, effective communication aged 15-29, unemployment rates were lower skills and lifelong learning skills. Many of for vocational education (15.3 percent) than these are acquired at an early age. A separate for general secondary (21.9 percent) and lower questionnaire administered to employers as for those with technical diplomas (8.1 percent) part of the 2006 School-to-Work Transition than for a tertiary degree (11.6 percent). Survey included sections for administrative, professional and manual jobs. Overall, Table 2.4 Percentage distribution of unemployed population by educational employers were looking for recruits who attainment, Mongolia, 2002–2003 understand the business world – can work in a team and take on responsibility – suggesting that Percentage distribution Educational level there are advantages to combining experience Total Male Female and study. There is also a need for IT skills, None 2.6 2.8 2.4 26 communications skills and foreign languages . Orimary 6.4 7.0 5.8 Incomplete secondary 33.5 38.3 28.1 Beyond issues of basic skills is the importance of promoting practical alternatives Complete secondary 31.6 28.3 35.3 Initial technical/ to university education. There is a tendency for 8.2 9.0 7.3 vocational diploma parents and youth to value academic training Technical/vocational over technical education and vocational 8.9 6.9 11.1 diploma skills, with the result that there are unemployed university graduates alongside unfi lled positions University graduate 8.8 7.7 10.0 in basic trades such as welding and plumbing. Total 100.0 100.0 100.0 Source: NSO, ADB. 2004. Main report of the Labour Table 2.3 Graduates from secondary and Force Survey 2002 -2003, Table 52, p. 62. tertiary institutions, Mongolia, 2005–2006 Number of graduates 2005-2006 Mongolia is now working to address General Secondary school, in fhousands 100,4 constraints in its vocational education and Percentage female 53.0 training (VET) system. Public investment Technical and vocational schools, in thousands 7,1 in VET is limited, with facilities and Percentage female 47.9 machinery outdated and in disrepair, while Colleges, universities and other institutions 23,6 private providers are not currently part of of higher education, in thousands a regulatory and monitoring framework to Percentage female 65.3 ensure that training meets standards in terms Total 131,1 of competency, courses, credentials, and Percentage female 54.9 27 Source: NSO. 2007. Mongolian Statistical Yearbook 2006, occupational safety and health . Table 19.3, p. 291.

25Ibid. p. 41. 27 26Francesco Pastore, June 2007. School-to-Work Transition. ILO Technical Education and Vocational Training Proposal for the Mil- Working paper, Draft. lennium Challenge Account, 2007.

42 MHDR 2007 Chapter 2 EMPLOYABILITY

Employers in newly emerging sectors School-to-Work Transition Survey give a lower are trying to recruit skilled workers but have rate of 4.2 percent for each additional year of diffi culty fi nding applicants who are qualifi ed. education. There are several explanations for Concern exists that young people lack basic the different results. The study by Dairii and skills. A 2004 survey by the Labour and Suruga (i) was not limited to young people, Social Welfare Agency found that 71 percent (ii) used a “fl atter” classifi cation for years of of companies had diffi culties recruiting education and (iii) was limited to individuals employees; 80 percent thought applicants in the capital32. did not have suitable skills; and 67 percent replied that job seekers lacked experience. Another approach is to estimate the The same survey predicted employer demand “wage effects” for educational qualifi cations. for practical trades such as bricklayers, Results confi rm the expectation that earnings decorators, carpenters, welders, plumbers and increase with education. These show that the assembly workers28. Even while a signifi cant returns to a university degree are estimated to number of Mongolian people are unable to fi nd be 12.7 percent by Dairii and Suruga and 9.5 good employment, Mongolia faces signifi cant percent for School-to-Work Transition Survey gaps in fi lling key jobs critical to economic data. Once again, this may be due to the fact development, and foreign workers make up a that the former was limited to Ulaanbaatar. signifi cant proportion of the active workforce The results using data from the School-to- in the rapidly growing mining, construction Work Transition Survey show that men with and road sectors. a vocational education have a very low wage premium compared to those with compulsory An interesting development is that education. This suggests a weakness in the employers are offering their own training on vocational education system. the job. According to the School-to-Work Transition Survey segment for employers, Overall, however, estimates show that 70 percent provide training to new hires. education is an important determinant of Most training is for practical skills needed earnings. A university degree brings high for a particular job. This suggests that on-the- returns, but young people with vocational job training may be job–specifi c, with less education are not much better off than those with opportunity for acquired skills to be used in just compulsory education. More generally, the other fi rms29. School-to-Work Transition Survey shows that young people with a vocational education have Two recent studies estimate the fewer opportunities and lower wages. returns to education. The fi rst is by Dairii and Suruga30 and the second by an ILO consultant Policy options using data from the 2006 School-to-Work At a time when a considerable number Transition Survey31. One approach is to use of Mongolian people are unable to fi nd decent Mincerian earnings equations to estimate work, Mongolia faces sizeable gaps in fi lling the increase in returns associated with an key jobs critical to economic development, additional year of education. According to and foreign workers make up a signifi cant Dairii and Suruga, the annual rate of return proportion of the active workforce in rapidly to education is 7.2 percent. Statistics from the growing sectors. As noted above, this 28ILO-UNESCO. Study cited in “Review of National Learning and Skills problem is related to both the education Policies,” Mongolian Country Paper prepared for an ILO-UNESCO Joint Policy Review, 2005. that young Mongolians are receiving, which 29Francesco Pastore. June 2007. School-to-Work Transition. ILO Work- frequently does not impart skills useful in ing paper, Draft. the job market, and to more specialized 30Amarjargal Dairii and Terukazu Suruga, September 2006. Economic Returns to Schooling in Transition: A Case of Mongolia, GSICS Work- vocational training for workers, which is ing Paper Series, No. 9, Graduate School of International Cooperation also not adequately linked to the needs of Studies, Kobe University. 31Francesco Pastore. June 2007. School-to-Work Transition. ILO Working paper, Draft. 32 ibid.

MHDR 2007 Chapter 2 43 EMPLOYABILITY the workplace. Addressing these problems employers and workers in reviewing training will require a sustained cooperative effort courses, setting occupational standards, involving all the key parties; educational offering on-the-job training and developing institutions, training providers, employers, bridge programmes between school and workers and Government. work, such as through apprenticeships and internships. In order to direct students to Technical skills are generally accorded training opportunities, guidance counsellors low status and little recognition in Mongolia and employment services require labour today. Academic education is seen, in many market information that is timely and cases mistakenly, as a more helpful path practical. In addition to ongoing Labour Force toward lucrative employment and social Surveys with comparable statistics to analyse status. As a result, most young people choose trends in the labour market, there is a need academic education rather than vocational for information and analysis to determine training despite emerging opportunities in the specifi c needs in emerging sectors. These trade occupations and technical jobs. At this issues apply equally well to improving time more than 140,000 Mongolian students vocational training for adults looking for new are attending universities, a number equal jobs or better employment. Recent surveys by the to nearly 15 percent of Mongolia’s work Mongolian Employers’ Federation have found force – and, as we have seen, many face high levels of dissatisfaction among employers serious diffi culties in fi nding a good job after regarding the quality and usefulness of training completing their formal education In 2006 received through existing training centres. only 7,100, or 5.4 percent, of graduates from secondary and tertiary institutions were from To achieve these ends, Mongolia needs technical and vocational schools, with women a national strategy and legal framework for accounting for 47.9 percent of these. policy coherence, with greater participation by employers’ organizations and trade unions Furthermore, an urgent need exists to together with the Ministry of Education, Culture reform vocational education and training and Science, Ministry of Social Welfare and to overcome the current mismatch between Labour, other line Ministries and Government the skills provided by training institutions agencies, and non-Government organizations. and the qualifi cations sought by competitive This should cover non-formal education enterprises. Key priorities are skilled and workplace training. It will require legal workers in certain service sectors, such as frameworks and policy coordination for fi nance and tourism, as well as jobs such as education and training. While progress mechanics, welders, plumbers, electricians, has been made since a working group was food technologists, construction engineers established to draft the Law on Vocational and heavy equipment operators. Vocational Training and Technical Education a need education and training is currently outdated, exists to continue strengthening coordination underfunded and infl exible. Although the between line ministries, employers’ problem has been identifi ed by special working organizations, trade unions, private training groups and donor-funded projects, VET is, for providers, non-government organizations the most part, centred in institutions and not and other partners. In addition, vocational linked to the workplace. There is a need to education and training must fi nd new establish standards and develop assessments, sources of fi nancial support. Evaluations to upgrade curricula and train teachers, and to in other countries indicate that successful revise textbooks and replace equipment. Young training often relies on fees from participants women and men need better bridges between and contributions by employers as well as classroom training and work experience. funding by the state.

Consensus exists that education and Creating a national council on vocational training require stronger links to labour training, skills standards and certifi cation markets. This entails greater participation by would represent a key step toward making

44 MHDR 2007 Chapter 2 EMPLOYABILITY a large and sustainable improvement in While some youth will seek to obtain the quality of these training programmes. paid jobs with vocational skills, others will This should involve key stakeholders to set up their own businesses. Young people support the development of a legal framework, benefi t from early exposure to business ideas fi nancing mechanisms, methodological centres, before entering the labour market, such as vocational standards, pedagogical issues, through training packages developed for use certifi cation procedures, teacher training, school by secondary schools, training institutions management and training facilities, among and university students. Steps can be taken others. All should lead to a system that identifi es to ensure that youth are able to participate skill needs and delivers training services in business incubators that link enterprise through formal institutions, non-formal learning training with follow-up support through and on-the-job training. Systems should be business development services. Business developed for workers to continuously advance leaders may wish to get involved in mentoring their skills and qualifi cations on continuous programmes to support young entrepreneurs. bases. Lifelong learning should be open to International networks such as the Prince’s all workers, including young people. Many Trust replicate good practices in mentoring34. of these considerations will be included Large companies might also provide support in amendments to the Law on Vocational to business incubators already operating in Training and Technical Education. Such a Mongolia. national council should oversee establishment of professional qualifi cation standards that are Other youth may wish to stay in rural useful for seeking employment in Mongolia areas, engaging in traditional herding and and abroad. Recognition of skills nationally productive activities related to livestock and internationally will enable people to fi nd and crops. These young people benefi t positions that use higher skills with better pay. from basic skills, technical training and extension services. As the number of herding Three high-priority sectors for this skills households with large herds and herder access programme are mining, construction and to bank credit rapidly expands35, there will be tourism, all of which are likely to continue to a growing need for training programmes in generate employment opportunities for those small business management for herders. Steps able to take advantage of them. Programmes should be taken to include youth in integrated to provide potential employees in these and strategies for local economic development, other sectors with the needed skills, and with drawing on the Employment Promotion Fund certifi cation of those skills, have the potential and facilitating access to entrepreneurship for signifi cant impact. training and business development services The problem with negative public attitudes, related to credit, processing and marketing. particularly among young women and men, This can support them in selling traditional toward technical jobs and vocational training products, developing new agribusinesses and could be addressed through attention to career diversifying livelihood activities guidance and public awareness about the value of technical jobs. “VET is not the second- or To highlight new policies to address third-best human development choice – it is the skills mismatch and vocational training, the basis of sustainable technological and advanced key issues should be part of action plans for technical development,” as one observer has youth employment that in turn are integrated declared33. Schools and media can promote the into national strategies for young people and value of practical-oriented, hands-on approaches employment promotion. Employment should to developing skills required in the labour market. be part of youth strategies, and youth should Competitions can showcase the jobs and careers be part of employment plans. of youth who succeed in technical vocations.

33U. Enkhtuvshin. 2007. Preface to report on High-Level VET Meeting 34See home page at http://www.princes-trust.org.uk/ organized by GTZ and the Ministry of Education, Culture and Science, 35See page 69. Ulaanbaatar, p. 4.

MHDR 2007 Chapter 2 45 EMPLOYABILITY

2.2 Behavioural issues: Recommendation 3 Attitudes and alcoholism Bridge the skills mismatch between supply and demand in the labour In discussions with a broad range of market stakeholders during the preparation of this • Strengthen links between the supply report, one question was repeatedly asked: of education and training and Why is it that many Mongolian workers are so demand for skills in labour markets, successful when they migrate abroad but less through greater participation so here at home? This is a complex question, by employers and unions in and there are many answers to it – surely the reviewing training courses, setting higher level of compensation that is generally occupational standards, offering available abroad is one important factor. on-the-job training and developing In addition to concerns about education, bridge programmes between training and experience of young recruits, school and work, such as through domestic employers as well as foreign apprenticeships and internships. companies mention problems related to • Launch a multi-stakeholder effort a perceived lack of “work ethic” among to reform vocational education and Mongolian recruits. Employers surveyed training to overcome the current by the Labour and Social Welfare Agency mismatch between the skills provided in 2004 complained that employees did not by training institutions and the demonstrate commitment on the job or ability qualifi cations sought by competitive to adapt, noting the absence of a work ethic enterprises. Involve employers, trade and problems with communication skills36. unions, Government and schools in Young people entering the job market need this effort. to have a better understanding of the kind • Launch a campaign to change of performance, commitment and attitudes attitudes toward vocational demanded by employers. education and training by promoting As noted already, manual labour and the value of practical-oriented, technical vocations are not preferred by many hands-on approaches to developing youth and their parents. During the socialist skills required in the labour market. period, students who performed well were • Create a national council on encouraged to pursue tertiary education in vocational training, skills standards academic courses, leaving those with less and certifi cation, involving key success to enter vocational training. This seems stakeholders who will work together to have left a stigma attached to technical to support the development of a legal education and vocational skills. According framework, fi nancing mechanisms, to the 2006 school-to-work survey, about 60 methodological centres, vocational percent of those still at school aspired to a standards, pedagogical issues, university education and 25 percent wanted certifi cation procedures, teacher a masters’ degree37. Yet graduates leaving training, school management and university typically do not have qualifi cations training facilities, among others. suitable for the jobs that are opening up in • Establish professional qualifi cation mining, construction and fi nance. Many have standards under the oversight of high expectations in terms of the earnings and this council that will be of use 36ILO-UNESCO. Study cited in “Review of National Learning and Skills to Mongolian workers seeking Policies,” Mongolian Country Paper prepared for an ILO-UNESCO employment at home and abroad. Joint Policy Review, 2005. 37ILO. School-to-Work Transitions in Mongolia: Executive summary and Main Findings, Employment Policy Papers, Employment Policy Department, Ulaanbaatar, 2007, p. 10.

46 MHDR 2007 Chapter 2 EMPLOYABILITY status of the positions they are seeking, making • The Participatory Poverty Assessment them reluctant to “trade down” by accepting also reported the perception among both jobs “below” their level of education. urban and rural poor that the severity of alcoholism was increasing, and These issues related to attitudes and asked Government policy to reduce aspirations are not unusual in the Asia and the availability of alcohol, increase its Pacifi c region. However, they signal the need price by taxation and restrict availability to make vocational training more relevant and of substandard alcoholic drinks and appropriate for jobs in the emerging sectors ingredients that are turning to foreign workers, given the shortage of qualifi cations and experience of The causative link between the Mongolian workforce. Greater attention unemployment, poverty and alcoholism is must be paid to matching the expectations of complex, and these studies cannot be considered job seekers and the jobs created in Mongolia, proof that alcoholism is causing poverty looking closely at both the demand side and and unemployment or vice versa. However, supply side of labour markets. given the seriousness of the problem, and given the frequency with which employers Another answer to the employability cited this as an obstacle to hiring workers, question, frequently raised in interviews there is a strong argument to be made for an throughout the country, was the problem of aggressive Government campaign to raise alcoholism, which creates large problems awareness about alcoholism as a workplace for both employers and for employees. issue in Mongolia. Recent studies confi rm the negative impact that alcohol abuse is having on the lives of The gender dimension of Mongolia’s Mongolian women and men and their ability alcohol abuse problem is one of its to obtain and keep good jobs. Here are some most striking characteristics; this is key fi ndings: overwhelmingly a male problem, although women are deeply affected by the anti-social • A recent WHO-funded epidemiological behaviour of male alcoholics. As already study of alcohol consumption in noted, the share of men who report work or Mongolia found that 33.9 percent of home problems due to alcohol abuse is three male respondents, and 11.5 percent of times higher than the share of women.38 The female, advised that at least once in the WHO study found that this gender difference previous year “drinking or being hung exists in virtually all aspects of alcoholism; over interfered with [their] work at to cite one further example, the percentage school, or a job, or at home” of men who drink excessively is four times • The same study found clear positive higher than the percentage of women, a correlations between heavy alcohol pattern that holds in almost all age brackets. consumption and unemployment and The distinct social pressures on men to poverty drink that reduce their employability and • The 2006 Participatory Poverty damage their health are a pressing issue in Assessment found repeated references to gender-based analysis of Mongolia’s social alcoholism as an obstacle to emergence and economic challenges. from poverty. Alcoholism is cited as a reason for lack of ability to fi nd or maintain employment and to obtain bank credits. It is a cause of pessimism for an individual about ability to rise out of poverty. Urban and rural poor were equally likely to mention alcoholism in 38WHO, 2006. Epidemiological study on prevalence of alcohol con- sumption, alcohol drinking patterns and alcohol related harms in Mon- this context. golia, Ulaanbaatar.

MHDR 2007 Chapter 2 47 EMPLOYABILITY

Conclusion: The need to bridge supply Recommendation 4 and demand in the labour market Reduce alcoholism This chapter has focused on issues in the • Launch a national campaign to supply of labour with the education, training, reduce alcoholism, educating attributes and attitudes that employers in people about its negative social and Mongolia require. The key recommendations economic impact on the Mongolian put forward here address the need to launch people a well-coordinated effort to strengthen the • Regulate access to alcohol connections between the education and vocational training that workers are receiving • Launch a workplace-based and the need of employers in the job market. educational campaign about the Recommendations are also offered regarding dangers of alcohol abuse suggesting the problem of alcoholism, which is directly ways to help workers who suffer from reducing the employability of a signifi cant alcoholism, involving employers’ number of working-age Mongolians, especially organizations, trade unions and the men. The next chapter will turn to trends and Government issues in market demand for labour.

48 MHDR 2007 Chapter 2 CHAPTER 3 Employment and poverty: Links, trends and some cross- cutting issues

MHDR 2007 Overview 49 EMPLOYMENT AND POVERTY

Employment and poverty: of the working-age population (both male Links, trends and some and female), who are engaged in decent work and enhancing the quality and productivity cross-cutting issues of available jobs. It replaces Target 16 under Goal 8, “In cooperation with developing This chapter focuses on key aspects of countries, develop and implement strategies employment and the demand for labour in the for decent and productive work for youth.” Mongolian economy. First, linkages between This new target expands the concept of decent employment and poverty and unemployment and productive work to the whole population, and poverty are analyzed, using the fi ndings of regardless of age, while still drawing specifi c the last Living Standards Measurement Survey. attention to the diffi culties experienced in the High rates of poverty among households labour market by women and young people. headed by employed individuals are one of The new target also introduces the concept of the most important fi ndings, indicating that full employment, again extending its coverage productivity and income are low. Patterns for to the whole population. the unemployed and the economically inactive are also reviewed. Trends in job creation in Data on employment and unemployment recent years are then analyzed: how many are based on the economic activities of jobs are being created, in which sectors, and individuals, while poverty statistics are in which locations? These are vital questions calculated for households. Because of for an employment creation strategy. This this, caution is required in interpreting the is followed by a situation analysis and connections between the employment of one recommendations regarding three important individual – the head of the household – and components of the economy: the agricultural the poverty status of the entire household. sector, the mining sector and the informal The data from 2002-2003 HIES/LSMS give economy. some clues to link poverty and employment through information about the household 3.1 Key linkages head. However, employment of the household head is not always the main cause of the 3.1.1 Employment and poverty: household’s poverty status; other factors Analyzing the key linkages include the size of the household, the number of other working members, and the number As noted in Chapter 1, the central role of of dependents. In some cases the household employment generation in poverty reduction head is not the principal breadwinner. Despite was acknowledged at the September 2005 these limitations, the HIES/LSMS results World Summit, when world leaders committed allow a useful comparison of poverty status themselves to the following new MDG target: by: (i) households headed by a herder; (ii) “Achieve full and productive employment households whose head is employed in non- and decent work for all, including women herding activities; (iii) households headed by and young people.” This decision had an unemployed individual;39 (iv) households been anticipated by Mongolia, which had headed by a pensioner who is economically already created a third target under MDG 1 inactive; and (v) households headed by an in its national MDG targets: “Develop and economically inactive non-pensioner. Table implement strategies for decent and productive 3.1, based on the 2002-2003 HIES/LSMS, work for youth.” The new global employment presents key fi ndings regarding poverty target is also included under Goal 1: Eradicate among these groups. extreme poverty and hunger, and explicitly recognizes the central place of decent work in poverty reduction. This highlights that halving world poverty by 2015 requires more effi cient 39As noted in Table 3.3, the LSMS defi ned unemployment using the use of labour resources, increasing the share “strict” international standard, which calculated a 6.6 percent unem- ployment rate.

50 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

Table 3.1 Poverty profi le according to economic activity of the household head, Mongolia, 2002-2003 Employed Out of labour force National Unemployed Herders Others Pensioners Others Poverty status: Poverty incidence (%) 36.1 39.2 30.3 48.7 35.7 51.4 Poverty gap 11.0 11.4 8.6 16.7 10.9 19.2 Severity 4.7 4.5 3.5 7.4 4.7 9.6 Memorandum items: Household size 4.3 4.2 4.4 4.7 3.9 4.6 Dependency ratio,% 43.3 45.0 38.0 42.2 57.0 37.5 Children (% household size) 31.2 32.6 34.7 40.9 17.1 34.4 Age of household head 44.5 41.1 41.0 37.7 61.9 39.6 Male household head, (%) 82.5 88.6 85.5 86.3 63.1 86.8 Share of those below poverty 100.0 28.8 37.8 4.0 15.6 13.8 line,% Population share 100.0 26.5 45.0 3.0 15.8 9.7 Poverty Likelihood ratio 1.09 0.84 1.33 0.99 1.42 Source: Authors calculation using NSO, WB, UNDP. HIES/LSMS 2002-2003, pages 25.

In this table “poverty incidence” represents the percentage of households For each group we have calculated in each group who are poor. “Share of a “poverty likelihood ratio,” the ratio of a those below the poverty line” shows what group’s poverty incidence to that of the overall percentage of Mongolia’s poor belonging to population. Values of less than 1 indicate a this group, and “population share” shows the group that is less likely to be poor than the share of Mongolia’s population in each group. average family, and values greater than 1 The table shows the share of the total poor in indicate a greater- than-average likelihood of Mongolia for each of these fi ve categories of poverty. The poverty likelihood ratios are the household head: employed as herders (28.8 following for households headed by: a herder percent); employed in other activities (37.8 (1.09), a person employed in other activities percent); unemployed (4 percent); pensioners (0.84), an unemployed person (1.33), a (15.6 percent); and economically inactive pensioner (0.99) and an economically inactive non-pensioners (13.8 percent). Although the non-pensioner (1.42). share of households headed by an unemployed Households with economically inactive person in the total poor population is quite low, non-pensioners as a head represent the poverty incidence among households with an group with the greatest risk of poverty, while unemployed head is nearly 50 percent. households with unemployed heads are nearly Particularly striking is the fact that 37.8 as likely to be poor. Households headed by percent of poor households are headed by fully herders are also at notably greater risk, while employed individuals who are not engaged households headed by persons employed in in herding. Because this covers such a broad non-herding activities are considerably less range of employment, it is useful to further likely to be poor than the average household. disaggregate those households according It should be noted that even this last group to their type of employer. The results are of households has a substantial poverty presented in Table 3.2. incidence.

MHDR 2007 Chapter 3 51 EMPLOYMENT AND POVERTY

Table 3.2 Poverty status of households sorted another refl ection of widening inequalities in by private, public and state-owned activity, society. Although private-sector employment Mongolia, 2002-2003 is generating substantive incomes for many Private Public State Mongolian families, the high incidence of Poverty status: poverty among other such households suggests Poverty incidence (%) 34.7 25.9 21.6 a large number of jobs have compensation too Poverty gap 9.9 7.5 4.9 low to keep households out of poverty. Severity 4.1 3.0 1.7 Memorandum items: Indeed, the fact that households headed Household size 4.4 4.5 4.5 by Government employees had a poverty Dependency ratio,% 39.4 37.2 32.2 incidence of 21.6 percent at the time of the Children (% household 36.0 33.5 31.6 size) 2002-2003 HIES/LSMS, while lower than that Age of household head 40.0 42.3 41.4 of any other group here, is also revealing of the Male of household extremely low real earnings that prevailed in 87.3 82.0 91.6 head,% Mongolia. In Section 3.1.2 the report analyzes Share below PL,% 23.2 12.8 1.8 more recent real wage trends. Population share 24.1 17.9 3.0 Poverty likelihood ratio 1.0 0.7 0.6 3.1.2 Unemployment and Poverty41 Source: NSO, WB, UNDP. HIES/LSMS 2002-2003, page 25.

The table shows that households headed High poverty among the households by Government workers and those in state- headed by the unemployed shows that owned businesses40 have considerably lower more jobs are needed. poverty incidence than the average household, High poverty among the employed as evidenced in their poverty likelihood shows that better jobs are needed. ratios of 0.7 and 0.6 respectively. However households headed by individuals employed in the private sector – including both formal According to statistics compiled and informal – have a poverty likelihood ratio of by the labour and social welfare offi ces, 1.0, meaning that their poverty rate is virtually unemployment has remained stable at around the same as that of the country as a whole. 3.7 percent for the last fi ve years. The most recent data in the Mongolian Statistical These data on linkages between Yearbook count 32,928 registered unemployed employment and poverty provide an analytical in 2006, of whom 43.0 percent were male foundation for the discussion that follows. and 57.0 percent were female. This equals an Specifi cally, when sorting households by the unemployment rate of 3.2 percent of the labour employment status of their head, we have force, a number that, on the surface, seems to identifi ed three distinct groups for whom the suggest unemployment is not a problem in risk of poverty is considerably higher than Mongolia. the average: households headed by herders, economically inactive non-pensioners and However, as is the case in many countries the unemployed. These three groups together of Asia, various measures of unemployment comprise 39.2 percent of the population, alone are not suffi cient to “diagnose” the and 46.6 percent of the country’s poor. In situation of the labour market. Most women addition, we have found that the poverty and men work for at least a few hours each week incidence of non-herding households whose to meet basic needs and are thus classifi ed as head is employed in the private sector is employed rather than unemployed or inactive. also surprisingly high – nearly as high as that of the population as a whole. This is 41This report makes use of the most recent available data. For detailed household-level analysis of labour market and poverty trends, the most recent detailed data sources are the 2002-3 Labor Force Survey, pub-

40 lished by the National Statistical Offi ce in 2004, and the 2002-3 Liv- State-owned businesses are such enterprises as Erdenet Metallurgical ing Standards Measurement Survey, also published in 2004. Wherever Complex, Mongolian Railways, Mongolian International Air Transport possible, the fi ndings from those surveys have been updated with more and other State-owned businesses run on a commercial basis. recent data.

52 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

According to international standards, a person from a survey of a nationally representative is employed if he or she was engaged in the sample of households, was obtained from the production of goods and services for just one LSMS of the same year (2002–2003). That hour in the week preceding the survey, or was survey indicated an unemployment rate of 6.6 absent from work but had a “job attachment.” percent. Many people are thus classifi ed as employed who think of themselves as unemployed and These two widely different estimates unemployment rates are often surprisingly low from two equally representative household in developing countries. Many Mongolians surveys in the same years also derive from consider themselves unemployed if they defi nitional differences. The Labour Force are working in a part-time job, temporary Survey defi nes unemployment broadly using employment or the informal economy. To cite a “relaxed” defi nition to include those among an interesting example, the WHO survey on the labour force without work and available for alcoholism in nine aimags, quoted earlier in work during the reference period, regardless the report, found that 31 percent of respondents of whether they were seeking work. The who were asked about their employment Labour Force Survey intentionally adopted status reported that they were “unemployed” this defi nition so as to include discouraged – far higher than has been reported by the workers who were not optimistic about the population census, Labour Force Survey and chances that a search would result in a job. HIES/LSMS. For this reason, it is necessary By contrast, the LSMS applied a “strict” to look at a broad range of indicators. defi nition, and counted only those without work or a work attachment, available for work Furthermore, data on registered and actively looking for work. These different unemployment, collected from administrative results, together with the different defi nitions records, count only job seekers who register of “unemployment” that they refl ect, are themselves as without work and seek summarized below: employment with the labour and social welfare Table 3.3 Measures of unemployment, offi ces. Statistics for registered unemployment Mongolia, 2002-2003 do not conform to international standards Unemployment insofar as not all of those unemployed report Source and concept of unemployment rate (%) to employment offi ces, and some who are already employed register in order to seek Offi cial statistics calculated by labour and social welfare offi ces- 3.4 additional work or a better job. registered unemployed only Living standards measurement A more reliable estimate of survey following the “strict” unemployment that meets international defi nition - counting persons 6.6 standards − persons who are without work without work, available for work or a job attachment, available for work and and actively seeking work actively seeking work − can be obtained from Labour Force Survey using the population censuses, Labour Force Surveys and “relaxed” defi nition- counting all persons without work and 14.2 other household-based surveys with questions available for work who may about economic activities. The fi rst Labour or may not be looking for Force Survey was conducted in Mongolia employment in 2002-200342 and determined a much Source: NSO.ADB.2004. Main report of the Labour Force Survey higher unemployment rate of 14.2 percent. 2002-2003, page 60; NSO, WB, UNDP, HIES/LSMS 2002-2003 Yet another different estimate, using data Even the higher unemployment rates

42This report makes use of the most recent data available. For detailed reported in the Labour Force Survey seem hard household-level analysis of labour market and poverty trends, the most to reconcile with the public opinion surveys that recent detailed and comprehensive sources of data are the 2002-2003 La- bour Force Survey, published by the National Statistical Offi ce in 2004 and repeatedly identify unemployment as either the 2002-2003 HIES/LSMS also published in 2004. Wherever possible, the fi ndings from these surveys have been compared with more recent National the fi rst or second most critical problem facing Statistical Offi ce data to update or check consistency. Mongolia. When examining unemployment

MHDR 2007 Chapter 3 53 EMPLOYMENT AND POVERTY rates, it is also helpful to bear in mind that herders comprise 35 percent of the labour force; Recommendation 5 although poverty among herder households is Improve labour market information high, at 39.2 percent, herders report virtually no unemployment. If one excludes herders • Conduct labour force assessments and calculates the unemployment rate in the on a quarterly or annual basis, rest of the workforce – the workers for whom following international standards, unemployment is a relevant possibility – the to give policy makers and other resulting unemployment rates are higher by stakeholders up-to-date information more than 50 percent. on employment trends • Gather and report gender- Table 3.4 Unemployment rates by poverty disaggregated employment data status, Mongolia, 2002-2003 • Establish a programme of regular Poor Non poorAll and ad hoc establishment-based surveys and censuses National 10.2 4.9 6.6 • Compile, analyze and disseminate Urban 15.9 6.8 9.1 practical information for employment Rural 6.5 2.6 4.1 promotion, such as for training providers, business development, Source: NSO.WB.UNDP.HIES/LSMS 2002-2003. livestock herders and job counselling, mediation and placement The relationship between unemployment and poverty in Mongolia can be summarized as follows: The unemployed are far likelier to be poor than the employed, but they still 3.1.3 Economically inactive population make up only a very small share of the poor. The HIES/LSMS 2002-2003 results presented We have seen that the household group in Table 3.4 show that the poor do have a with the highest risk of poverty was the 9.7 higher rate of unemployment than the non- percent of the population in households headed poor – 10.2 percent as against 4.9 percent by individuals who were not pensioners but nationwide, and 15.9 percent compared to. 6.8 were “out of the labour force.” This group percent in urban areas. But the fact that only comprises 13.8 percent of Mongolia’s poor. A 1 in 10 poor people is unemployed across the clear understanding of the characteristics and country shows that lack of employment is not composition of these households is essential the main cause of poverty in Mongolia. Even to identify policies for raising income. in urban areas, where 1 in 6 poor people are unemployed, the vast majority of the poor are While the “active population” are women engaged in some kind of work. The wide gap and men in the labour force either employed in between the poverty rate and unemployment the production of goods and services counted rate indicates that poverty is a much more as gross domestic product (GDP), or available widespread phenomenon than unemployment. and seeking this kind of work, the “inactive In short, most of the poor in Mongolia are population” are working-age individuals ‘working poor,’ not unemployed. not engaged in these economic activities. “Inactivity” should be interpreted carefully. For example, individuals of working age who are continuing their education are classifi ed as inactive. Thus, it is quite common for labour force participation rates to fall in the process of development, as more of the population is in education and young people attain higher education or participate in training activities.

54 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

An additional category of inactivity is people Care should be taken to note any errors who have retired or consider themselves in the collection of data due to possible “too old” to be working. The share in this misunderstanding by individuals providing group naturally increase when the population information about employment. For example, is aging. Others counted as inactive have in the early years of economic transition many dropped out of the labour force “temporarily” people equated employment with formal paid because they are sick. Also included are jobs in public service and state enterprises. persons with disabilities who are unable to New opportunities in self-employment and the work. Individuals who retire before age 60 informal economy that opened up, often as a may also be classifi ed as inactive, although response to being without a formal sector job, they may have done so at that age with full were not always correctly counted as being pension for any number of reasons other than in the labour force. Some people considered “idleness.” In Mongolia today, for example, informal jobs as a strategy to cope, but overall the retirement age for women is 55, fi ve years considered themselves to be “unemployed” earlier than men. Setting different retirement since they were out of work in the formal ages according to sex contradicts important sector. principles of gender equity, since working longer generally allows an individual to maintain their It is therefore important to distinguish earnings for a longer time, and to receive a clearly among different groups within the higher pension upon retirement. People who population classifi ed as “inactive.” Individuals have engaged in hazardous work, and military who have voluntarily chosen to retire before personnel, are also entitled to earlier retirement. age 60 and receive a pension according to their employment contract and Mongolian The inactive population includes law are also, from the policy perspective, those engaged in household duties and quite different from working-age individuals caregiving without pay. While not counted who have no income and are not seeking as “economically active,” they nonetheless employment. It is possible that pensioners may contribute to the well-being of families actually be engaged in some kind of income- and communities. If these same tasks are generating activities that they do not report performed by a paid employee, such work as employment in surveys. Some who have would be counted as an economic activity and given up looking for work during a specifi ed the person would be classifi ed as a member of period may be justifi ed in their conclusions the labour force. that the prospects are bleak due to the current situation in the labour market. These may not The size of the inactive population also be willingly “idle.” depends on the defi nition and measurement of unemployment. As discussed above, On the other hand, a risk exists of social individuals without work or an attachment to exclusion when women and men drop out of work, and available to work but not seeking the labour force. The most recent Participatory work, would be classifi ed as unemployed under Poverty Assessment in Mongolia noted worries the “relaxed” defi nition of unemployment. expressed in focus groups about “laziness, However, they would be classifi ed instead pessimism and alcoholism.”43 as inactive – or as “discouraged workers” – under the “strict” defi nition of unemployment. The statistics on women and men who Discouraged workers include individuals who are not in the labour force are provided by have stopped looking for work either because the population censuses and the Labour Force they believe there is no work available, or Survey. While these offer a “snapshot,” they do because they believe that the employment not provide data for trends in the short term. available does not offer earnings or other conditions that they consider acceptable. 43NSO of Mongolia, ADB and WB. 2006. Participatory Poverty Assess- ment Mongolia, Ulaanbaatar, p. 3.

MHDR 2007 Chapter 3 55 EMPLOYMENT AND POVERTY

The information collected through Table 3.5 Reasons for being economically inactive administrative records and published in reports for population 15+ years by sex and urban-rural on population and employment offer annual residence, Mongolia, 2002−2003 data, but these do not follow international Reasons Total Urban Rural standards on economic activity. for being econom- Fe- Fe- Fe- Total Male Total Male Total Male ically male male male The Labour Force Survey of 2002-2003 inactive counted as “currently inactive” those persons House- hold 10.2 7.1 12.4 8.8 5.6 11.3 13.2 10.7 15.0 not in the labour force, defi ned as persons who duties are neither employed nor unemployed during Study- 38.7 42.3 36.0 42.5 46.4 39.5 30.0 32.3 28.3 the week before the survey. As already noted ing Retired the survey followed the “relaxed” defi nition of and/or 28.5 26.0 30.4 26.9 24.4 28.8 32.2 29.8 33.9 unemployment described elsewhere, which does old age Disabil- 5.1 6.4 4.0 4.7 6.2 3.6 5.8 7.0 4.9 not require that a person be actively engaged in ity looking for a job to be counted as unemployed. Not avai- lable for 2.2 3.3 1.4 2.4 3.8 1.3 1.8 2.3 1.5 Rather, the unemployed are defi ned as out of work work and desiring employment. Based on this Looking defi nition, the residual was counted as “not after 4.6 0.5 7.6 5.0 0.5 8.4 3.6 0.3 5.9 children economically active” and a total of 534,400 Temp- people were found to belong to this group. orary ailment 2.9 3.5 2.4 2.8 3.5 2.3 3.0 3.3 2.7 Reasons given by the 307,000 women and or 227,400 men outside the labour market are sickness Below presented in Table 3.5. Following international working 1.1 1.3 1.0 0.9 1.2 0.6 1.7 1.5 1.7 standards, the statistics cover the population age aged 15 years and older. Other 6.7 9.6 4.8 6.0 8.4 4.2 8.7 12.8 6.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 The number of persons classifi ed as Number 534400 227400 307000 372500 160900 211600 161900 66500 95400 currently inactive was greater for urban areas Source: NSO, ADB. 2004. Main report of the Labour Force Survey 2002–2003, Table 38, p. 48. (372,500) than in rural areas (161,900). It is not unusual for activity rates to be higher, The largest share of the inactive and thus inactivity rates lower, in rural areas, population, nearly 4 in 10 (38.7 percent), was where women and men are likely to have a in school, followed by over one-fourth who job. Even though they may not be working due were retired (28.5 percent). Household duties to the weather, for example, they have a “job and child care accounted for 14.8 percent. attachment.” And many herders and farmers The pattern of inactivity differs somewhat spend at least one hour in the week before the by sex and residence. For both sexes school survey taking care of animals, tending crops attendance and retirement are by far the most or repairing equipment. common reasons for inactivity.

56 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

The share of women who were inactive Figure 3.2 Trends in a measure of the category because of retirement and age is larger than for “not in employment” and “not in school” that of men refl ecting the earlier retirement compared to the employment-to-population age for women which is still practiced in ratio and registered unemployment rate, Mongolia. The signifi cantly larger number of Mongolia, 1992-2006 inactive women than men is a result of many causes: the higher school enrolment rates among women, the earlier retirement age, and the greater likelihood that women will take responsibility for looking after children and household duties.

Figure 3.1 Reasons for inactivity for selected groups aged 15+ years by sex, Mongolia, 2002−2003

Source: NSO. Population Employment, 2006.

3.2 Job creation trends – How many, Source: NSO, ADB. 2004. Main report of the Labour Force Survey 2002-2003, Table 38, p. 48. where, and are the earnings adequate?

The share of the inactive population not When households are sorted by the in the labour force because they were studying employment of their heads, three key groups was larger in urban areas than in rural areas. have been identifi ed as particularly vulnerable This is not surprising, since upper secondary to poverty: schools, colleges and universities are located in aimag centres and the capital. • Households headed by the unemployed have very high poverty rates – nearly half Clearly, the population not engaged in are poor economic activity is a diverse group. Without • Households headed by inactive individuals additional data and analysis we cannot without a pension have the highest poverty conclude that those who are not in the labour likelihood of all analytical groups – more force are somehow disinclined to work. The than half fall below the poverty line proportion of the working-age population who were neither working nor studying increased • Households headed by employed during 2001 and 2002, but has subsequently individuals also have high rates of poverty, been declining. particularly for herder-headed households (39.2 percent) and for non-herding households headed by private-sector workers (34.7 percent)

MHDR 2007 Chapter 3 57 EMPLOYMENT AND POVERTY

An employment-based poverty reduction high elasticity when growth is slow, and lower strategy that will address these problems must elasticity when growth is high, illustrates focus on: creating more jobs, to absorb the the challenge that Mongolia faces; it is only unemployed and inactive; creating better when growth and the employment elasticity jobs with greater labour productivity and of growth are both high that rapid poverty higher real earnings to reduce the number of reduction can result. And even rapid growth working poor and provide greater incentive that is employment intensive will not result to the economically inactive to enter or re- in substantive decreases in poverty incidence enter the labour force; creating employment unless poor people gain access to employment opportunities in the rural areas to provide opportunities with adequate earnings. additional sources of income for poor herding households; and building the skills base of Table 3.6 Employment elasticity of growth the Mongolian labour force so that they are by three recent periods, Mongolia better prepared to take advantage of new Growth in Growth in Elasticity opportunities as they become available in both employment GDP paid employment and self-employment. 1997-2006 0.59 0.32 0.55 (All period) The role of employment in transmitting the benefi t of economic growth to the poor 1997-2000 0.72 0.06 0.08 has been increasingly recognized in recent 2000-2003 1.28 0.15 0.11 years. Yet studies show there is no automatic link between rapid growth and employment 2003-2006 0.31 0.09 0.29 generation. When economic growth is not Source: Autors calculition using NSO Mongolian employment–intensive, there will be less Statistsical Yearbooks, various years. progress in poverty reduction.44 A closer examination of Mongolia employment An examination of recent employment elasticity data for the last decade in Table data confi rms that more rapid economic growth 3.6 reveals considerable variation in trends. is not creating enough jobs, and the right jobs, For the period 1997-2006, this elasticity was to give a strong boost to poverty reduction. 0.59, indicating that overall job creation has Table 3.7 shows job creation trends for 2000- responded well to GDP growth. However, 2006, including overall numbers of job growth decomposing these nine years into three in this period, and then a breakdown into periods of three years each reveals marked 2000-2003 and 2003-2006. We see that even differences. as growth accelerated sharply after 2003, the pace of job creation slowed nearly 30 percent, The highest values for elasticity are with only 83,000 net new jobs being created found in the fi rst two periods, when GDP in 2003-2006, compared to 118,000 in 2000- growth was considerably slower than from 2003. Even more striking is that the stronger 2003 to 2006, and, in fact, the elasticity was net job creation in 2000-2003 occurred even greater than 1 for the period 2000-2003, as the number of herders fell by more than with job creation faster than GDP growth. 43,000, whereas in 2003-2006 the number From 2003 to 2006, when growth accelerated of herders declined by less than 14,000. The rapidly, the elasticity declined sharply to increase in employment outside of the herding 0.31, a somewhat low rate compared to sector in 2003-2006 was 97,000, compared to countries with successful economic growth 161,000 in 2000-2003. accompanied by job creation. This pattern of

44See Rizwan Islam: Fighting poverty: The Development–Employ- ment Link, Lynne Rienner Publishers Inc., Boulder, 2006, and UNDP and ILO: Asian Experience on Growth, Employment and Poverty: An Overview With Special Reference to the Findings of Some Recent Case Studies, UNDP Regional Centre in Colombo and International Labour Offi ce in Geneva, 2007.

58 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

Table 3.7 Change in employment by industrial classifi cation, Mongolia, 2000-2006 (Increase in jobs in thousands, and in %) Industrial 2000-2006 2000-2003 2003-2006 % % % Employment Employment Employment change change change Agriculture, hunting and forestry -2.1 -0.5 -6 -1.5 3.9 1.0 Mining and quarrying 23.3 125.3 13.3 71.5 10.0 31.3 Manufacturing -7.6 -13.9 0.3 0.5 -7.9 -14.4 Electricity, gas and water supply 12.2 68.5 4.9 27.5 7.3 32.2 Construction 32.9 140.6 11.7 50.0 21.2 60.4 Wholesale and retail trade, repair of motorvehicles. Motocycles and 76.7 91.4 45.8 54.6 30.9 23.8 personal goods Hotels and restaurants 17.7 133.1 10 75.2 7.7 33.0 Transport, storage and 7.1 20.8 5.4 15.8 1.7 4.3 communication Financial intermediation 10 147.1 5.8 85.3 4.2 33.3 Real estate, renting and business 4.8 66.7 2.1 29.2 2.7 29.0 activities Public administration and defence, 12.2 35.2 10.1 29.1 2.1 4.7 compulsory social security Education 7.6 14.0 0.9 1.7 6.7 12.1 Health and social security 5.8 17.3 3.3 9.9 2.5 6.8 Community, social and personal -6.1 -21.0 8 27.6 -14.1 -38.1 services Others 6.4 152.4 1.9 45.2 4.5 73.8 Total 200.9 24.8 117.5 14.5 83.4 9.0 Source: Authors calculation based on NSO. Mongolian Statistical Yearbook, 1989-2002, 2004, 2006

The location of the jobs created offers Table 3.8 Net employment creation by another reason why poverty rates remain high. location, Mongolia, 2000-2006 The data on new job creation in Table 3.8 show Non- Total Herders that between 2000 and 2003, 36.6 percent of herders new jobs were created outside of Ulaanbaatar. 2000-2006 However, in 2004-2006 that share fell by more than half, to 17.0 percent. In 2000-2003 some Total 200.9 -57.0 257.9 43,000 net new jobs were added outside of the Ulaanbaatar 143.9 0.9 143.0 capital, but in the next three years that number rest of country 57.0 -57.9 114.9 fell to only 14,200. The low productivity 2000-2003 and low income of most rural employment Total 117.5 -43.5 161.0 makes it even more diffi cult for rural poor to climb out of poverty. It is not surprising that Ulaanbaatar 74.7 0.06 74.6 rural poverty has been increasing during this rest of country 42.8 -43.6 86.4 period, under these circ*mstances. The slow 2003-2006 pace of recent rural job creation is one of the Total 83.4 -13.6 97.0 root causes of rapid rural-urban migration. Ulaanbaatar 69.2 0.9 68.3 rest of country 14.2 -14.4 28.6 Source: Authors calculation based NSO, Staistical Yearbook, 2004, 2006.

MHDR 2007 Chapter 3 59 EMPLOYMENT AND POVERTY

The share of total employment in low- productivity less than half the national paying sectors continues to be very high, average. This low productivity is refl ected although new job creation in some higher- in the wage earnings of the relatively small wage sectors is accelerating as well. Table number of paid employees engaged in this 3.9 presents data on current distribution of sector, which after adjusting for infl ation jobs, the pace of job creation, and salary and rose by only 6.5 percent between 2003 productivity trends according to the sector of and 2006, far below the national average employment. Wages and salaries are reported increase of 21.7 percent. Agricultural- only for the much smaller segment of the sector wages are by far the lowest of all labour force that encompasses formal sector sectors. employees, which in some sectors, especially 2. Wholesale and retail trade, with the second- agriculture, represents only a small portion lowest average wage of all sectors, produced of the total sectoral work force. Therefore, the largest share of new employment; the sectoral salary data in the following table 37.1 percent, although a number of the should not be interpreted as the average new workers in this sector were in the income of all people engaged in that sector, informal sector and/or self-employed, and only of paid employees. Job creation and therefore not included in the salary survey. productivity numbers are for the entire sector, More positively, construction and mining including paid employees, the self-employed generated 25.4 percent and 12.0 percent and all others. of new jobs respectively, and both also Table 3.9 Job creation, real wages and productivity by sector, Mongolia, 2003-2006

New job Labour Percentage Real salary, Industrial created, in Share of Real monthly salary, in productivity, of total percentage classifi cation thousand new jobs thousand Togrogs (2000) current price, in employment of change Togrogs thousand Togrogs 2006 2003-6 2003-6 2003 2006 2006 Agriculture 38.8 3.9 5 41.8 44.5 6.5 1494.12 Mining 4.1 10 13 77.2 98.8 28.0 23328.90 Manufacturing 4.7 -7.9 -10 72.0 83.9 16.6 4006.70 Electricity 3.0 7.3 9 84.5 94.3 11.6 2715.70 Construction 5.6 21.2 27 74.8 89.8 20.1 1230.50 Trade 15.9 30.9 39 56.2 57.9 3.1 3973.70 Hotel and 3.1 7.7 10 76.6 88.4 15.4 886.40 restaurant Transportation and 4.1 1.7 2 92.3 87.7 -5.0 8271.30 communications Financial 1.7 4.2 5 90.3 172.8 91.2 6664.90 intermediation Real estate 1.2 2.7 3 56.8 61.9 9.0 3257.30 Public 4.6 2.1 3 68.1 95.5 40.4 2177.00 administration Education 6.1 6.7 8 67.4 83.6 23.9 1620.60 Health 3.9 2.5 3 52.9 78.8 48.9 1203.10 Social services 2.3 -14.1 -18 46.7 61.7 32.1 1019.40 National Average 70.9 86.3 21.7 3207.4 Source: Authors calculation based on NSO Mongolian Statistical Yearbook 2006

These data reveal a number of signifi cant showed strong average real wage increases. facts about employment, wage and productivity Among private businesses, only those trends: in fi nancial intermediation had a higher 1. Agriculture by far remains the largest sector average wage increase (91.2 percent), but by number of workers, with 38.8 percent that sector comprised only 1.7 percent of of total employment. It is also one of the total jobs in 2006. lowest-productivity sectors, with average

60 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

3. Government wages in this period Analysis of the size of fi rms opening rose strongly in real terms, refl ecting and expanding in Mongolia in recent years Government policy to bring public adds further information about job creation. sector wages to reasonable levels. As of According to the business register database, 2006, real wages in most Government a total of 30,817 “active establishments” positions were comparable to, and in were registered at the end of 2006. Four out some cases higher than, most private- of fi ve of these fi rms were micro-enterprises sector wages. Productivity rose strongly employing fewer than 10 employees. in services predominantly provided by the Government, such as public administration, Table 3.10 Active enterprises by employment health and social security, and education. size, Mongolia, 2001–2006 Employment Year 4. Labour productivity in the mining sector size 2001 2002 2003 2004 2005 2006 is more than seven times the national 0-9 19967 20515 21704 20693 17780 24848 average, while in transport and fi nance it 10-19 2008 2052 2016 1913 2001 2701 is more than double but in agriculture less 20-49 1913 1896 1806 1751 1782 2139 than 50 percent of the average. The links 50+ 1066 1060 1026 999 984 1129 between productivity and pay are clear in Total 24954 25523 26552 25356 22547 30817 these sectors; however, additional research Source:NSO. Mongolian Statistical Yearbooks 2005, 2006. is required in some others, including retail and wholesale trade, in which productivity Sustained growth has been far stronger is high but wages low, and construction, in in the small enterprise groups. However, the which wages are higher than average but signifi cant increase in the number of larger productivity quite low. enterprises in 2006 is also noteworthy, and if sustained could lead to a shift in job creation This table presents a picture of a labour to ensure a more balanced distribution among market with both encouraging and disturbing small and large fi rms. Recent changes in the trends. Strong real wages and salaries increase Corporate Income Tax, now a fl at 15 percent in mining, construction, manufacturing, for all but the very largest companies, may fi nancial intermediation and Government further support creation and expansion of large posts have sharply raised the living standards enterprises, which previously faced a strong of 33 percent of the labour force. If these incentive to stay small in order to reduce their sectors continue to expand and offer new tax obligations. employment opportunities, this will have a positive impact on a signifi cant portion of However, the fact remains that small and the Mongolian people. At the same time, the medium-sized enterprises have been increasing majority of the work force is still engaged in in number far more rapidly than larger ones, sectors with low productivity and low wages. with 83.3 percent of the increase in enterprises This pattern is completely consistent with the being in fi rms with fewer than 10 employees and rapid widening of income inequality that has 95.1 percent in fi rms with fewer than 20. This occurred in Mongolia from 2003 to 2006, as suggests that support for job creation in small discussed already in Chapter 1. and medium enterprises, particularly in rural areas, must be a linchpin of an employment- based poverty reduction programme.

MHDR 2007 Chapter 3 61 EMPLOYMENT AND POVERTY

Figure 3.3 Percentage distribution of Box 7 employment by major sector, Mongolia, 1995−2006 Policy options for job creation and small and medium enterprises The ILO Job Creation in Small and Medium- Sized Enterprise Recommendation, 1998 (No. 189) promotes Government steps toward the following general goals: (i) to create a supportive policy and legal framework conducive to the growth and development of micro, small and medium enterprises; (ii) to develop an enterprise culture that favours initiative, productivity, environmental consciousness, quality jobs, good labour Source: NSO. Mongolian Statistical Yearbooks and industrial relations, and adequate 2001, 2002 and 2006. and equitable social practices; and (iii) to develop an effective service infrastructure Agriculture designed to promote the availability and accessibility of a range of support. The falling shares of agricultural production and livestock herding are Source: ILO. Job Creation in refl ected in the percentage shares attributed Small Medium - Sized Enterprise to employment and GDP, illustrated in Figure Recommendation, 1998, No. 189. 3.4, with output dropping dramatically during the period of the dzud. Between 1999 and 2006 the percentage of employment in agriculture fell from almost one-half to 40.3 percent, 3.3 Sectoral trends while the sector’s share output declined by There have been signifi cant changes nearly one half from 37 percent to just 18.8 in production and employment during the percent of GDP in 2006. These data reconfi rm years of Mongolia’s transition to a market the declining labour productivity in livestock economy. The following fi gures illustrate key herding noted later in this chapter. overall trends in employment and growth in Figure 3.4 Shares of employment and GDP the agricultural, industrial and service sectors. in agriculture, Mongolia, 1995–2006 They are followed by more focused analysis of issues in several key sectors. Figure 3.3 shows the percentage distribution of employment by major sectors over time, refl ecting the increase in herding during early stages of the economic transition followed by a gradual decline in the share of employment in agriculture. The share of employment in industry fell with a virtual collapse of manufacturing at the beginning of the transition. This trend was reversed in recent years as jobs were created in construction, Source: NSO. Mongolian Statistical Yearbooks mining and garment manufacture. The share 2001, 2002 and 2006. of employment in the service sector has increased steadily.

62 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

Industry Over the same period employment in mining and quarrying increased from 18,200 The percentage of the people working to 41,900. in the industrial sector fell during the 1990s before rising slowly in recent years, reaching Figure 3.6 Numbers of people employed in the 17.3 percent of total employment in 2006. The industrial sector, Mongolia, 1995–2006 share of the sector in output was more than double that amount, at 40.3 percent in 2006. This refl ects the fact that mining is relatively capital-intensive.

Figure 3.5 Shares of employment and GDP in the industrial sector, Mongolia, 1995–2006

Source: NSO. Mongolian Statistical Yearbooks 2001, 2002 and 2006.

Services

The share of employment in services increased steadily over the period 1995-2006, as shown in Figure 3.8. By 2006, 4 in 10 of those working held jobs in the service sector, Source: NSO. Mongolian Statistical Yearbooks 2001, 2002 and 2006. which accounted for 40.9 percent of GDP. Within the sector, most employment was in Figure 3.6 shows the trends for trade and repair services, which outnumbered employment in mining, manufacturing, jobs in public administration, defence, construction and utilities. The number of education, health and social security by 2006. Mongolians working in manufacturing fell Other sub-sectors employed fewer workers, from 67,300 in 1995 to 47,000 in 2006. An but the number of jobs in transport, hotels increase in production of garments and textiles and restaurants and fi nancial services has that accompanied preferential trade status was increased in recent years as discussed in the later reversed with the end of the Multi-Fibre section on job creation. Agreement in 1 January 2005 and China’s entry into the World Trade Organization. Figure 3.7 Shares of employment and GDP in This led to a drop in exports, accompanied the service sector, Mongolia, 1995–2006 by closure of plants and dismissal of workers. After a number of measures were introduced to reduce production costs – abolition of tariffs and taxes on imported inputs and equipment, subsidy of social insurance contributions and temporary measures to limit Chinese imports to US markets – orders, production and employment increased. However, Mongolia will need to fi nd other markets for its exports of light manufactures. The fi gure below also shows a signifi cant increase in construction Source: NSO. Mongolian Statistical Yearbooks jobs, from 29,500 in 1995 to 56,300 in 2006. 2001, 2002 and 2006, Ulaanbaatar.

MHDR 2007 Chapter 3 63 EMPLOYMENT AND POVERTY

In 2006 the distribution of employment growth. The more labour-intensive service by major sector was 38.8 percent in agriculture, and agricultural sectors, and within industry 17.3 percent in industry and 43.9 percent in the manufacturing sector, were all growing services. Earlier estimates from the HIES/ relatively slowly, and employment was LSMS 2002−200345 showed that the poor are likewise either stagnating or growing slowly. more apt than the non-poor to be in agriculture This is the employment picture that underlay and less likely to be in services. The largest the sharp rise in income inequality in these proportion of women and men in the service same years, as discussed in Chapter 1: a small sector fi nd jobs in trade activities and public number of new high-paying jobs being created administration, followed by the education in a high-productivity, high-growth sector, sub-sector and health services. while most of the labour force continues to be engaged in low–productivity, low–income, Figure 3.8 Numbers employed in the service low-growth sectors. sector, Mongolia, 1995-2006 Many observers of Mongolia’s economy in recent years have drawn attention to the economic risks that face countries heavily dependent on exports of natural resources.46 “Resource curse” is a widely used phrase that describes these risks – overvalued currency resulting in lack of competitiveness in non- commodity sectors; high volatility in output and public fi nance due to dependence on volatile global commodity market prices; corruption; an economy centred on the large Source: NSO. Mongolian Statistical Yearbooks fl ows of cash arising out of one sector, while 2001, 2002 and 2006. others lack dynamism and entrepreneurship; and the ineffective use of fi scal policy because 3.4 The need for greater of the ease of revenue collection from one diversifi cation of sources of dominant sector. Much of Mongolia’s rapid upturn in growth and budget revenues since growth and job creation 2004 has been a result of the surge in global commodity prices, not of any major shift in The preceding sections of this chapter Government policy or expansion in private- have highlighted that the pace of job creation sector activity. This increase in revenues slowed in Mongolia in 2004, precisely as presents policy makers with an opportunity economic growth accelerated sharply. The to create conditions for sustainable, broad- reason for this counterintuitive situation can based growth. But international experience be deduced from the sectoral analysis of has shown that this will happen only if the employment and GDP reviewed above. As we Government actively tries to diversify the have seen, between 2003 and 2006 the share of economy, enhance competitiveness, and GDP produced by the industrial sector soared stimulate entrepreneurship and investment in from 25.4 percent to 40.3 percent, while the non-mining sectors. share of employment generated by industry rose only slightly, from 15.6 percent to 17.3 In addition to being sound economic percent. The increase in GDP was primarily policy, such an approach offers the best chance being generated by the highly capital-intensive for the Government to reverse recent trends mining sector, which created some new jobs, of low employment elasticity of growth, and but with very low employment elasticity of generate more and better jobs for Mongolia’s 45The HIES/LSMS 2002-2003 showed a slightly different distribution of people, especially the poor. employment by major sector: 43 percent in agriculture, 11 percent in industry and 46 percent in services. 46Cite Arshad’s talk, and the World Bank CEM.

64 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

been raised about its capacity for generation of productive employment. Between 1994 Recommendation 6 and 2006 the number of workers in mining Diversify sources of economic increased from 14,600 to 41,900, a far greater growth and employment generation percentage increase than in any other sector – but as of 2006 this still represented only 4.1 • Use revenues from the mining sector percent of the total work force. Virtually all of to build a more diversifi ed economy, this increase has occurred since 2000, during through investment in human which time the average annual increase has capital, physical infrastructure and been 20.9 percent. Most mining production entrepreneurship development, is taking place in highly capital-intensive in order to reduce dependence on formal sector fi rms, which produced nearly 30 export of natural resources, and to percent of Mongolian GDP in 2006 with that open employment opportunities small share of the work force. Productivity and to greater numbers of women and wages are therefore considerably higher for men not currently in decent and that segment of the labour force, with labour productive work productivity in 2006 seven times higher than • Identify new ways to diversify the national average, and average wages and production in areas that enable poor salaries 20 percent higher than the average. households to obtain employment But the broader impact on employment and and earnings poverty has been limited.

• Monitor closely competitiveness Clearly, mining opens opportunities for of fi rms in non-mining sectors of both formal and informal employment. Along Mongolia, including the impact of with the increase of formal employment in the exchange rate trends mining sector, informal employment has been • Create and maintain an investment- growing intensively in recent years. Informal friendly tax policy and a taxpayer- employment in the mining sector is a new friendly administration by phenomenon that emerged in Mongolia after reducing red tape and streamlining the transition to the market economy. In the the audit process, in order to early years of transition, informal coal mining promote transparency, growth and started in such mines as Nalaikh, formerly employment in Mongolian business large state-owned operations that had stopped their activities, but since 1998 informal gold mining has become widespread. Informal The following section of this report mining of other minerals also has spread discusses mining sector issues in some rapidly. At present informal miners mine detail and presents recommendations for the not only coal, but gold and fl uorspar. Some generation of diversifi ed pro-poor growth data suggest that informal employment in from the mining sector. the Mongolian mining sector equals formal 3.5 The mining sector employment in the sector, or even exceeds it. challenge: How to generate The importance of the mining sector in pro-poor growth an employment-based strategy for poverty reduction, beyond the job openings that it The mining sector is booming in Mongolia generates directly, is three-fold. First, it is the today, with foreign and domestic investment principal source of resources – in terms of pouring into it and output, employment and both budgetary revenue and foreign exchange wages growing rapidly. However, despite the earnings – that can be invested to support the leading role played by mining as the engine creation of further productive employment. of growth in recent years, concerns have For example, these resources can be invested

MHDR 2007 Chapter 3 65 EMPLOYMENT AND POVERTY in agriculture and other labour-intensive the 45,000 persons formally employed in this industries, including those based on sector are foreign workers. Another positive livestock products, as well as in Government step has been incentives for investors to build programmes such as infrastructure, processing and infrastructure facilities in education and training. Second, the forward Mongolia, ensuring that greater value-added and backward linkages including mineral activities are undertaken within the country processing and domestic sourcing of and generating many more new employment energy inputs manufactured materials and opportunities than would be the case if complementary services, including both unprocessed mineral output is exported and larger enterprises and smaller business. electricity imported. At the same time, much Preliminary calculations for this report more remains to be done. suggest that the mining sector of Mongolia indirectly generates 3.8 jobs in other sectors Attention to future allocation of the fi scal for every 1 in the mining sector.47 Third, resources generated by the mining sector is the aggregate demand generated by the also essential, most importantly, investment export of minerals can stimulate output and in human development and infrastructure employment more broadly. The mining sector development using employment-intensive can thus act as the engine that drives growth methods where appropriate. For the mining and employment in the rest of the economy sector to generate more employment through its roles of providing investible opportunities for poor, unemployed resources and stimulating demand. A crucial Mongolians, training of the professional policy concern here is how to develop an workforce should be a high priority. While integrated and balanced industrial strategy some training will be provided on the job that will ensure that resources and demand by employers, a pressing need exists for generated by mining do actually promote ambitious, focused mining-sector skill the sectors where there is greater scope for training programmes, to avert a major skills labour absorption. mismatch as new mines open and workers are required. If this demand cannot be met by the Policy options educational and training system of Mongolia, these jobs will be fi lled by foreign workers. The mining sector is certain to be a The use of revenues from mining sector major source of growth for the Mongolian activities to fi nance world-class education and economy for decades to come. However, the training programmes in this and related fi elds experience of recent years shows clearly that could greatly enhance the contribution of the it will be diffi cult to make this growth more mining sector to Mongolia’s development. broad-based, so that it helps raise the living standards of a large number of Mongolia’s Informal mining has become an important population and serves to reduce poverty. A source of employment and income for tens policy is needed to make the mining sector a of thousands of Mongolian households. better source of employment. However, this work often takes place under hazardous conditions, with an unacceptably Some important steps have already been high degree of child labour involved. There taken, for example, in draft agreements with is, therefore, a need to formalize informal foreign mining companies that require the mining, in other words, to establish a legal hiring of Mongolian workers. One reason and regulatory framework; to resolve issues that the mining sector has not been able to of taxation, permits, social insurance and contribute signifi cantly to unemployment and health care of informal miners; to ensure poverty reduction is because 13 percent of workplace safety; and to give individuals an opportunity to mine gold and other natural 47Background paper, Dr. Ch. Khashchuluun. This fi gure was derived resources in an environmentally friendly way. by econometric analysis of past trends and would not automatically be applicable in projections of future employment impact of mining sector This would allow effective steps to ensure that growth.

66 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY current trends toward use of child labour in 3.6 Employment generation this sector are ended, avoiding the situation in in rural areas: Reaching poor which substantial numbers of Mongolians are uneducated and unskilled in the future. herder households

In order to ensure that a greater share of The fi rst decade of the transition from income and wealth generated by the mining a command economy to a market system sector supports growth in other sectors, other witnessed tremendous changes in the rural Mongolian businesses need to develop as sector of Mongolia, with the dismantling of suppliers to the mining sector producing agricultural collectives and state farms together machinery, equipment and components needed with cutbacks in public expenditures to in mining operations. Government policy to support and maintain administration, schools, promote development of such activities will clinics and infrastructure. Privatization of increase the mining sector contribution to livestock at fi rst provided new opportunities output and employment. for employment and livelihoods in rural areas. Other workers found jobs in provincial capitals and soum centres. During the 1990s, Recommendation 7 the contribution of agriculture to output and employment rose as unemployment and Diversify production and promote poverty pushed more workers into the sector. employment linked to mining Herd size increased steadily from 1993 to 1999 • Build and deepen links between and the composition of herds also changed, mining and other upstream and with a sharp rise in the number of goats downstream sectors, by promoting produced for cashmere. Fewer animals were the development of mineral raised intensively because of the high costs processing and encouraging the of feed and shelter. However, increases in the domestic sourcing of energy and numbers of herders and livestock came to an other inputs including from small abrupt end with a series of harsh winters and enterprises summer droughts in 1999-2002 that resulted 48 • Actively promote training and skills in many families losing their animals. development for employment in Livestock-sector productivity and the mining sector, to ensure that income fell sharply in the 1990s as the number Mongolian women and men have of herders increased much more rapidly than the skills required to fi ll high-paying the number of livestock. Table 3.11 shows that current and future employment the number of livestock – as measured in bod openings in this sector – per herder fell from 64.4 in 1989 to 24.5 in • Improve legal coordination and 1993, a drop of 62.2 percent. This had a direct formalize informal mining impact on the income of herding families, as study after study has confi rmed a very strong correlation between herder income and herd size.49

48Elizabeth Morris and Ole Bruun. 2005. Promoting Employment Op- portunities in Rural Mongolia: Past Experience and ILO Approaches, ILO Subregional Offi ce for East Asia, Bangkok. 49See, e..g., World Bank (2006).

MHDR 2007 Chapter 3 67 EMPLOYMENT AND POVERTY

Table 3.11 Number of livestock in bod, that all of those households have fewer than Mongolia, 1989-2006 100 animals, a very close approximation to

Number of Number of Bod/ the actual situation, shares for the remaining

livestock in bod* herders Herders households – the herding households, that is 1989 8723.0 135.4 64.4 – become: 1990 9067.5 147.5 61.5 1991 8901.5 245.0 36.3 1999 2006 1992 8782.3 330.1 26.6 Share with over 100 59.0% 63.2% 1993 8529.5 347.9 24.5 Share with over 200 23.3% 32.5% 1994 9163.5 377.1 24.3 Share with over 500 3.5% 6.3% 1995 9865.5 390.5 25.3 1996 10182.9 395.4 25.8 We see that the share of herding 1997 10680.5 410.0 26.1 households with larger herds is sharply higher 1998 11148.8 414.4 26.9 than before the dzud, but that 36.8 percent of 1999 11430.1 417.7 27.4 herding households still own fewer than 100 2000 9836.7 421.4 23.3 animals, a scale at which they are likely to face 2001 7875.5 407.0 19.4 serious diffi culties. This pattern is consistent 2002 7165.4 389.8 18.4 with the marked increase in rural inequality 2003 7269.2 377.9 19.2 reported by the National Statistical Offi ce. 2004 7707.4 369.7 20.9 The Gini coeffi cient for income distribution in 2005 8177.9 364.3 22.5 rural Mongolia increased from 0.313 to 0.360 2006 9061.7 364.4 24.9 between 2003 and 2006; for the countryside * 0.67 camel, 1 horse, 1 cattle, 6 sheep, 8 goats each equals excluding soum centres, the fi gure increased to one bod Source: Authors calculation using NSO, Mongolian from 0.309 to 0.346. Statistical Yearbook, 1989-2006 Table 3.12 Size distribution of herds - livestock/ As can be seen in Table 3.12, the household, all households with private livestock, restocking of the herds since the three years Mongolia, 1999 and 2006 of dzud has resulted in a markedly different 1999 2006 pattern in distribution of livestock than the pre- Number of Num- Num- dzud growth in the 1990s. Comparing 1999, ber of Cumu- ber of Cumu- livestock Share Share the year that herd size peaked before the dzud, house- lative house- lative with 2006 shows a decrease in the numbers holds holds 10 and 28669 10.62 10.62 21710 9.63 9.63 of herding households and an increase in the below share of families with large herds. The share of 11-30 35970 13.32 23.94 27791 12.33 21.96 households with 100 animals or fewer was 58.5 31-50 31874 11.81 35.75 24175 10.73 32.69 percent in 1999, compared with 52.1 percent in 51-100 61347 22.73 58.48 43687 19.38 52.07 2006. At the same time, the share of households 101-200 67840 25.13 83.61 52445 23.27 75.34 with more than 200 animals, the size at which 201-500 37635 13.94 97.55 44765 19.86 95.21 herding operations are generally considered 501-999 5438 2.01 99.56 8458 3.75 98.96 to be sustainable as a commercial operation, 1000-1499 1061 0.39 99.96 2024 0.90 99.86 increased from 16.4 percent to 24.6 percent. 1500-2000 75 0.03 99.98 182 0.08 99.94 2001, and 41 0.02 100.00 129 0.06 100.00 The change is even more striking when above we take into account that the share of non- Total 269950 100.00 225366 100.00 of which herding households in all households with herding 189900 170755 livestock animals fell from 29.7 percent in households 1999 to 24.2 percent in 2006.50 If we assume Source: NSO. Mongolian Statistical Yearbook, 1989-2002, 2006.

50Data on herd size are gathered by the annual livestock census,which does not calculate separate results for herding and non-herding house- holds, with non-herding households being primarily those with other principal sources of income that also raise a small number of livestock on the side.

68 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

Policy options: Rural This rapid expansion in the fi nancial employment creation through resources of the rural population has signifi cant implications for the rural economy, creating reinvigoration of the soum new demand for other goods and services centres and generating new opportunities for small businesses. There are other indicators of the From 1991 to 2001, the fi rst 10 years increased level of economic activity in rural of the transition era, the story of Mongolian areas. For example, the percentage of herding rural development was almost entirely a story households with electricity has soared from of agriculture. In years of good weather, the 28.9 percent in 2003 to 78.7 percent in 2006,52 rural population did well; in harsh years, and the share with television has risen along they suffered. Non-livestock and non-crop with their access to electricity. The growth of production from rural areas shrank to relative artisanal mining in rural Mongolia, while posing insignifi cance, and even core Government many policy challenges, may be an additional services were cut back due to fi scal constraints. reason for the infl ux of cash and galvanization The soum centre, an important economic unit of economic activities in the soums.. during the central planning era, when the collective livestock negdel and collective However encouraging these signs, farms were headquartered in the soums, we have already noted that there is a core declined to a shadow of what it had been. group of poor rural population, particularly herders with small livestock holdings, who In recent years there has been some are increasingly caught in a poverty trap.53 sign of an upturn in the soum economies, for According to recent World Bank analysis, several reasons. First, the resurgence of the 67 percent of Mongolia’s herding families Mongolian fi nancial sector has led to dramatic were either chronically poor or vulnerable increases in fi nancial resources in Mongolian to being pushed into poverty by a shock.54 soum centres. As recently as three years ago While it is desirable to fi nd ways to improve reports frequently referred to rural Mongolia their earnings and lessen their vulnerability as as a cash-free economy, based on barter and herders – including an excellent proposal for trade in kind. However, this situation has livestock insurance presented in the World Bank changed dramatically. Table 3.13 shows data report55 – non-herding sources of employment from Khan Bank, the Mongolian bank with the and income are also urgently required. Many largest rural operations, regarding its “herder other rural poor live in soum centres, where the 51 loans and deposits” in soum centre branches: 2002-2003 LSMS found a poverty rate of 44.6 Table 3.13 Khan bank loans and deposits*, percent, higher than for any other analytical Mongolia, 2002-2007 group, including herders, aimag centre residents (values and amount in thousand Togrogs) and Ulaanbaatar residents. Average Total Number Total value loan value of of loans of loans The current rate of job creation in rural amount deposits Mongolia is far too slow to offer hope of 12/31/2002** 3,081 2,874,357 933 12/31/2003 6,065 5,886,933 971 increased living standards to the 37.0 percent 12/31/2004 13,265 12,329,815 929 of the rural population below the poverty 12/31/2005 32,366 32,442,271 1,002 8,793,387 line. Many of those poor are herders, whose 12/31/2006 52,022 62,788,963 1,207 15,372,211 small herd size makes it essential that at least 9/30/2007 59,655 89,341,432 1,498 16,366,462 some family members fi nd alternative sources * Data provided by Khan Bank to the authors of income. Soum centres are the logical ** Until mid-2003 Khan Bank was known as the Agricultural Bank of Mongolia, and was a state-owned institution. At that time it was the location from which a serious employment- only bank operating in most soums, although at this time several other commercial banks are expanding their rural operations 52NSO. Mongolian Statistical Yearbook 2006, p. 189, table 10.17. 53 51These are soum-centre based programmes designed for herders. It is WB. 2006. Mongolia Poverty Assessment, Chapter 3, provides an ex- possible that other rural people participate as well, although the bank cellent detailed analysis of the situation of poor herding families. has other loan products and deposit programmes in soum centres that do 54Ibid. not specifi cally target herders. 55Ibid.

MHDR 2007 Chapter 3 69 EMPLOYMENT AND POVERTY based approach to alleviating rural poverty can be implemented. For one thing, studies Box 8 have found that herders with small herds are International experience in increasingly cut off from the broader market employment generation: India’s economy and are less likely to take advantage National Rural Employment of opportunities to migrate and receive skills Guarantee Act training. Moving services as close as possible to them will be essential.56 At this time there The National Rural Employment also is a strong case for active Government Guarantee Act was launched by policy to reinvigorate the soum centre economy the Indian Parliament in 2005 and as a means of facilitating further growth and goes beyond poverty alleviation to employment generation in rural areas. Soum recognize employment as a legal right. centres already serve as important fi nancial It provides a minimum guaranteed sectors for their populations; the expansion of wage employment of 100 days in every their roles as commercial and social centres, fi scal year to rural households with consistent with the resurgent rural market unemployed adult members prepared to economy, requires a few key supporting do unskilled manual work. In addition to actions by the Government. the guaranteed employment, it includes provisions for child care for women As mentioned in Box 8, these steps, who participate, creation of durable while all potentially benefi cial, would be far assets and other issues. To date, it has more effective if undertaken along with a been implemented in 200 districts in broader and more determined decentralization seven states. programme, giving soum citizens’ khurals and Source: P. Chakraborty. 2007. governors far greater authority to chart and “Implementation of the National implement local development initiatives. Rural Employment Guarantee Act in India: Spatial Dimensions and Fiscal Implications”, The Levy Economics At present these bodies have almost no role Institute, Bard College, Annandale-on- as decision makers, and instead are tasked with Hudson, NY. implementing central policy and expenditure decisions. The benefi ts in fi scal management produced by the Public Sector Financial A number of options are available, such Management Law of 2002 are indisputable, and as assignment to local Governments of such have contributed to Mongolia’s strong fi scal revenue sources as environmental protection performance of the last fi ve years. In this new taxes. Local Governments with strong informal era, however, with much higher levels of fi scal mining activities could gain new revenue sources resources at the Government’s disposal and from those activities, which in turn could fi nance with the emergence of clear new challenges and supporting services and infrastructure. opportunities at the local level in rural Mongolia, a partial reversal of this approach is needed to boost local Governments’ ability to generate growth and employment.

56See UNDP and Government of Mongolia. 2004. Study Report: Bring- ing Herders’ Assets into Full Economic and Productive Use.

70 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

trade” and overseas remittances. Markets Recommendation 8 and kiosks sprang up in Ulaanbaatar, other Rural employment generation cities and soum centres. Many operators – reinvigorating the soum centre found employment opportunities in transport economy businesses driving informal taxis in the capital • Promote decentralization by giving and offering transport services between rural soum governors and citizens’ khurals areas and urban centres. The absence of an greater infl uence in charting and enabling business environment was a concern, implementing local development with laws and regulations for licenses and initiatives, including the authority permits diffi cult and costly to maintain. Other to command more fi scal resources. issues related to fi nancial services, marketing • Expand public employment services- support, working conditions, workplace safety 57 training, counselling, mediation, and social security in the informal economy. information and other services in Informal mining gradually began soum centres, allocating a larger to absorb growing numbers of Mongolian share of the Employment Promotion workers. At fi rst many of the miners were Fund for use at the soum level and unemployed geologists, engineers, cooks, ensuring implementation through drivers and their families who lost their jobs programmes launched to utilize with the collapse of State-owned mining these funds. enterprises. As formal mining picked up • Expand investment in physical in the mid-1990s, some of these workers infrastructure and promote local found employment in mineral exploration economic development in areas companies. Those who continued to seek an identifi ed through participatory income through informal mining were largely processes, using labour-intensive farm workers, urban poor and livestock approaches where appropriate. herders.58 • Pilot small business development services and agricultural extension Defi nitions and measurement services in soum centres that supporting herders as entrepreneurs. Different statistical measures have been outlined by the ILO in its International • Promote public-private partnerships Conferences of Labour Statisticians (ICLS) to expand employment and for the informal economy. The fi rst or informal community services sector focuses on production units and corresponds to national accounts measuring 3.7 Rolling back informality the economic contribution to national output. While the guidelines are rather complicated, The informal economy played an the main idea is that these are generally important role over the transition period by unorganized activities in the household sector absorbing redundant workers, cyclically without separate accounts. Informal units may unemployed, new entrants and additional be unregistered and employ a small number workers. The growth of informal activities of regular workers. These may be either resulted from downsizing and privatizing own-account enterprises or enterprises of state-owned enterprises; cutbacks in the informal employers. civil service; structural change of economic Informal own-account enterprises are production; shifts in domestic demand for owned by households and operated by own- consumer goods; and migration from rural account workers, either alone or in partnership areas to aimag centres. Some enterprising individuals set up businesses with fi nancial 57Elizabeth Morris. 2001. The Informal Sector in Mongolia: Profi les, resources from family savings, the “suitcase Needs and Strategies, ILO, Bangkok. 58Ibid.

MHDR 2007 Chapter 3 71 EMPLOYMENT AND POVERTY with members of the same or other households. consumption” rather than market production These enterprises may occasionally employ should not be included in the informal sector. contributing family workers and employees In order to distinguish between agricultural but do not regularly engage paid employees. production and the informal sector, the guidelines suggest that non-agricultural Enterprises of informal employers are activities be excluded. According to the 2002- household enterprises owned and operated 2003 Labour Force Survey, non-agricultural by employers, either alone or in partnership, employment in Mongolia was estimated at which employ one or more employees 460,300, or 53.4 percent of total employment. continuously. For operational purposes, Not surprisingly, most non-agricultural enterprises of informal enterprises may be employment was in urban areas (80 percent), defi ned according to the level of employment with only a small share in rural areas (20 or registration of the enterprise or employees. percent). In order to examine a cut-off in terms of numbers of employees, non-agricultural Household enterprises engaged in employment by enterprise size is presented in production of goods and services for “own Table 3.14

Table 3.14 Currently employed population 15+ years employed in non-agricultural private enterprise, partnership and self employed as a main occupation, Mongolia, 2002-2003

No regular 1-4 paid 5-9 paid 10+ paid Total employees employees employees employees Number % Number % Number % Number % Number % Urban Private 9.900 10.4 3.300 4.3 3.600 38.3 1.200 36.4 30.0 enterprise Partnership 2.000 2.1 100 0.1 600 6.4 500 15.2 800 13.3 Self-employed 83.300 87.5 73.100 95.6 5.200 55.3 1.600 48.5 3.400 56.7 Total 95.200 100.0 76.500 100.0 9.400 100.0 3.300 100.0 6.000 100.0 Rural Private 4.500 15.1 1.800 7.1 1.900 55.9 600 75.0 200 40.0 enterprise Partnership 200 0.7 - - 200 5.9 - - - - Self-employed 25.200 84.3 23.400 92.9 1.300 38.2 200 25.0 300 60.0 Total 29.900 100.0 25.200 100 3.400 100.0 800 100.0 500 100.0 Total Private 14.400 11.5 5.100 5.0 5.500 43.0 1.800 43.9 2.000 30.8 enterprise Partnership 2.200 1.8 100 0.1 800 6.3 500 12.2 800 12.3 Self-employed 108.500 86.7 96.500 94.9 6.500 50.8 1.800 43.9 3.700 56.9 Total 125.100 100.0 101.700 100.0 12.800 100.0 4.100 100.0 6.500 100.0 Source: NSO, ADB. 2004. Main report of the Labour Force Survey 2002-2003, Table 13, p.117.

The Labour Force Survey collected to 4 paid employees, with the other categories information about the number of employees accounting for less than 10 percent. The share in non-agricultural establishments classifi ed of workers in self-employed non-agricultural as private enterprise, partnership or self- enterprises was slightly smaller in urban areas employed by urban or rural residence. Of the than in rural areas. Altogether, private enterprises 125,100 employed in these non-agricultural employed just 11.5 percent of the total. enterprises, 86.7 percent were working in businesses classifi ed as self-employed. The report of the Labour Force Survey Of them, 8 out of 10 (81.3 percent) had no counted non-agricultural employment in regular employees. Another 10 percent had 1 enterprises with either no regular employees

72 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

(101,700) or 1–4 paid employees (12,800) Figure 3.10 Educational attainment of current in non-agricultural employment. This gives employment in the informal sector, Mongolia, a total of 114,500 in the principal jobs. If 2002−2003 the same defi nition is applied to secondary employment, an additional 11,500 would be classifi ed in the informal sector. Together, the total was 126,000, or just 14.6 percent of total employment.59 This fi gure is clearly a “lower limit” that might be expanded to an “upper estimate” approaching the number of self- employed people in both agriculture and non- agriculture, or a total of 484,000, representing 56.1 percent of total employment for the year of the Labour Force Survey. Source: NSO, ADB. Labour Force Survey 2002-2003.

However, for policy purposes the strict Informal employment, on the other defi nition can give a profi le of employment hand, refers to the nature of the job rather characteristics of the informal sector that than the organization of production. This can excludes agricultural production. These are be defi ned by a number of characteristics presented in Figure 3.9. including, for example, whether the worker has a labour contract, social security or paid Figure 3.9 Some characteristics of employment in leave. Workers in informal employment are the informal sector for non-agricultural activities, typically not covered by labour laws. Mongolia, 2002-2003 One method of defi ning paid employment as “informal” is by whether or not the employee is covered by a labour contract. This question was included in the Labour Force Survey. According to the survey, 39.4 percent of the employed population was in paid employment during 2002-2003. Of these, 312,000 had a contract, while 26,700 were employed “under civil law,” representing only 3.1 percent of total employment. If we Source: NSO, ADB. Labour Force Survey 2002-2003. count only those with a contract in formal According to the Labour Force Survey employment, and add those without a contract defi nition of the informal sector, more than to the self-employment to come up with a half of the operators were male. Seven out of fi gure for informal employment, then the ten were working in urban areas. A large share total was 550,500, or 63.7 percent of the held service, sales and market jobs. employed population in 2002-2003: 65.9 percent of employed men and 65.1 percent of employed women. Women accounted for just 46.2 percent of total informal employment measured in this way.

The 2006 School-to-Work Transition Survey, which covered about 6,100 individuals in 4,600 households representing more than 808,800 young people aged 16–29, showed

59If the cutoff were less than 10 employees, an additional 4,100 would that 112,200 out of a total of 124,200 in be added to this fi gure. Without the data for secondary employment, it is paid employment had some kind of contract, diffi cult to come up with a total.

MHDR 2007 Chapter 3 73 EMPLOYMENT AND POVERTY either written (108,600) or oral (3,700). entirely on economic growth or the formal The remaining 164,200 were either in paid sector to create decent work.60 employment without a contract or in self- employment. If we count these categories as Since the early days of the economic “informal employment,” then 59.4 percent transition, Mongolia has taken steps to address of youth employment was in this category. issues related to the informal economy. Using the same defi nition and source, two- Following the National Employment thirds of all informal employment among Conference in 2001, the Government youth aged 15-29 was in livestock herding, organized a National Conference on the and consequently, a larger share of the total Informal Economy in 2002. The National was in rural areas (78.7 percent) than urban Policy on Informal Employment, adopted by areas (21.3 percent). Parliament in 2006, outlines an action plan based on the ILO concept of decent work. Policy options Box 9 While measurement of output and National policy on the informal employment in the informal economy has economy produced different estimates since the beginning of the economic transition, the The policy defi nes the informal economy as sector has clearly been creating jobs and production units of non-agricultural goods income for many Mongolians. At the same and services that are not prohibited and not fully refl ected in offi cial registration, time, concerns exist about both the nature statistical information and social protection. of production and the quality of jobs. For According to the defi nition, informal the most part, informal economy workers employment lacks work organization. The remain unrecorded, unregistered, unprotected objective of this policy is to “formalize” and unorganized. However, Government, informal employment by providing employers and workers have worked to “roll Government services; creating legal, back informality.” A challenge will be to economic, labour and social protection maintain the momentum. guarantees to protect people in informal employment from risks; and ensuring Informal employment in gold mining economic growth.61 The policy is being has attracted public interest. One issue is implemented in three phases, with the children working in hazardous conditions. fi rst during 2005-2007, the second 2008- 2011 and the third 2012-2015. The The Mongolian Employers’ Federation has implementation strategy includes links worked to provide alternative livelihoods with macroeconomic policy, improvements through non-formal education, skills training in the legal environment, coordination and job placement for children and youth. with employment promotion policies, A 2005 study showed that protective labour improvements in social protection, and legislation applies only to persons who have cooperation through social dialogue and written labour contracts. A draft bill on public participation. artisanal mining is under consideration. Source: Government of Mongolia. 2006. The Policy of the Government of Mongolia In recent years, existing NGOs and on Informal Employment, Draft submitted to Parliament in December 2005 and approved in trade unions have worked actively to support January 2006, unoffi cial translation. workers employed in the informal economy. New associations and unions were created with hopes of protecting separate groups of 60Tajgman, David, Ed.: Extending Labour Protection to the Informal informal economy workers – informal miners, Economy: Bringing Together Three Country Experiences,“Extension of labour legislation to the informal economy in Mongolia,” by Damdinjav drivers and owners of microbuses and taxis, Narmandakh, ILO Subregional Offi ce for East Asia, (forthcoming), pp. photographers, street vendors, market sellers 108–109. 61 Government of Mongolia. 2006. The Policy of the Government of and others – since reliance cannot be placed Mongolia on Informal Employment, Draft submitted to Parliament in December 2005 and approved in January 2006, unoffi cial translation.

74 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

The Ministry of Social Welfare and As part of that review, steps could be Labour has approved guidelines and taken that increase employers’ incentives allocated funds to conduct a registration of to register their employees in State social informal economy operators in aimags and insurance programmes. In consultations with districts during 2007, using forms designed stakeholders, a number stated that many for this purpose. Each operator will receive employers keep their employees “off the a number and certifi cate. In addition, two books” because of the heavy social insurance donor-funded projects are organizing the fees employers must pay. This high payroll registration of miners and children in informal tax rate of 19 percent is frequently cited by mining. With resources from the Employment Mongolian businesses as an obstacle to job Promotion Fund, private sector trade unions creation; employers are given a strong incentive are conducting activities to raise awareness to hire fewer workers or to keep workers off about the Government policy and action the books, using informal arrangements or plan on informal employment. The fund is short-term contracts. Mongolian Employers also being used to organize training for the Federation surveys of members have identifi ed startup and expansion of small businesses. the lowering of this rate as a priority request. Amendments to the Employment Promotion Table 3.15 presents recent social insurance Law have opened access by informal participation data that refl ect the magnitude of economy operators to credit, training and the problem. business incubator services offered by these Table 3.15 Social insurance indicators, offi ces. Clearly, support should continue to Mongolia, 1995, 2000, 2006 encourage livelihood activities, informal Social insurance 1995 2000 2006 businesses and microenterprises to grow and indicators expand by creating a supportive policy and Total employees 767.6 809.0 1009.9 legal environment, encouraging an enterprise (thousands) culture and developing service infrastructure Agriculture 354.2 393.5 391.4 in line with measures outlined in Box 9. Non-Agriculture 413.4 415.5 618.5 Employers who pay social security 14069.0 13017.0 18535.0 Another issue that continues to be raised contributions is how to extend social insurance to the Number of people informal economy. Under the current system, under pension, industrial injury 409.1 381.4 427.8 both informal workers and livestock herders and unemployment may opt to contribute voluntarily. However, insurance (thousands) only a small percentage participates in the Mandatory insurance 395.4 363.9 401.4 scheme, which will result in many Mongolians Voluntary 13.7 17.5 26.4 facing retirement without a pension. Another Share of employees enrolled in pension, urgent issue is health insurance. A recent study industrial injury 53.3 47.1 42.4 by the ILO of small vendors in Ulaanbaatar, and unemployment Darkhan and Erdenet found that residents insurance (%) Increase in employees 41.4 200.9 there people identifi ed lack of social security from previous period as their biggest problem, with 88 percent Non-Agriculture 2.1 203.0 advising that they were not covered by health Increase in enrolled employees from -27.7 46.3 insurance programmes. The same study found previous period similar results in broader surveys of informal Source: Data provided by the SSIGO. economy workers, herders and unemployed individuals62. In reviewing the social insurance These data indicate that the great majority system, a high priority should be paid to of jobs being created in Mongolia do not offer dealing with these problems. participation in the state pension, workplace injury and unemployment insurance systems. Even when we exclude herders from these 62 ILO. 2006. Poverty, Employment in Cambodia, Mongolia, Thailand, p. 17 calculations and look only at the non-

MHDR 2007 Chapter 3 75 EMPLOYMENT AND POVERTY agricultural workforce, the fi nding is quite than in the formal sector. Lack of awareness striking. Between 2000 and 2006, 203,000 new about labour contracts and labour rights suggests non-agricultural jobs were created; however, a need to raise awareness among employers and enrolment in the pension fund increased by workers about rights and responsibilities. Both only 46,300 during the same period. The parties would benefi t from greater capacity to fact that the bulk of new employees are not engage in consultations about working conditions. able to participate in core social insurance Those working in the informal economy would programmes represents a major issue. benefi t from membership-based organizations to represent their interests and raise these issues Proponents of a lower payroll tax in discussions about the policies affecting frequently cite the increased personal income them. Thus, it will be important to encourage tax collections resulting from establishment organization by employers’ associations, trade of a lower fl at tax rate to support the idea union, cooperatives and other groups. that a lowered social insurance fee will also lead to higher enrolment and no loss in Recommendation 9 collections. While it is quite likely that the number of contributors to the social insurance Roll back informality fund will increase in response to a rate cut, • Continue to implement the state it is also certain that total contributions will policy and action plan on informal decline substantially, especially in the initial employment through integrated period following the cut. For this reason, a approaches and tripartite support rate adjustment and a decline in resources • Continue and expand efforts to going to the Social Insurance Fund cannot “formalize” informal employment be considered only from the perspective of by extending Government services employment impact. The fi rst goal of social and economic support to informal insurance policy must be to guarantee a reliable workers and ensuring that they are and adequate benefi t to the population, in this covered by the labour law and social case meaning to meet old-age needs. A decline protection in resource infl ows cannot be allowed to lead to a decline in projected pension benefi ts for • Accelerate registration of informal- Mongolian workers. economy workers under the national plan in order to improve: access to Considerable attention has been paid Government services, participation to occupational safety and health in drafting in consultations on policies a law now under consideration. The issue of and programmes, membership workplace safety in the informal economy can in employers and workers be addressed in a number of ways aimed at organizations and awareness about identifying potential dangers and taking steps labour rights to reduce the risks of accidents. Participants • Launch a campaign to raise at the National Employment Forum, held awareness among workers in the in November 2007, called for participatory informal economy about job contracts assessments, labour inspection and greater and labour rights and engage them involvement by the social partners in safety in discussions about policies and campaigns. programmes that affect them • Support business development of The discussion of defi nition and informal economy operators through measurement highlighted some of the statistical steps such as improving access challenges in measuring informal enterprises to credit, training and business and identifying informal employment. The incubator services, and by including informal economy includes both employers them in Government and donor and employees. Labour relations are different programmes

76 MHDR 2007 Chapter 3 EMPLOYMENT AND POVERTY

Conclusion • Create and support new associations including employers’ organizations, This chapter has analyzed a number of trade unions and cooperatives, that critical issues in Mongolia’s employment protect groups of informal economy trends; the linkages between employment workers including informal miners, status and poverty; the number, location and drivers and owners of microbuses nature of jobs being created in the last six and taxis, photographers, street years; and the specifi c challenges faced in vendors, market sellers and others three sectors of particular importance to the • Reduce employers’ social insurance Mongolian labour market – the herding sector, contributions to an appropriate level, the mining sector and the informal economy. while ensuring that Social Insurance The fact that in Mongolia today there are far Fund fi nances are not weakened and more working poor than unemployed poor is future benefi ts not jeopardized a central fi nding for any employment-based poverty reduction strategy. While increasing • Improve workplace safety in the employment elasticity of growth is the informal economy through important, an equally high priority in order to participatory assessments, labour provide decent work to new entrants into the inspection, greater involvement labour market and those who are unemployed, by the social partners in safety underemployed or inactive must be to improve campaigns and pilot testing the productivity, compensation and quality of of innovative approaches to work for those already employed. For the occupational safety and health herding population, the key recommendation • Broaden use of the Employment is generating more non-herding employment Promotion Fund to support opportunities, focusing at the soum centre activities in rural areas and urban level. For the mining sector, the most important centres including vocational recommendation is a set of steps that can be training, entrepreneurship training part of a policy to turn the capital-intensive and business incubators to improve and relatively low-employment sector into a productivity and earnings in the source of broad-based employment generation. informal economy. For the informal economy, the source of employment for a large number of Mongolian women and men, further steps are needed to build on progress in integrating these workers into employment covered by labour law and supported by business development services. These latter services include fi nancial services and training programmes, covered by social protection, benefi ting from workplace safety and represented by membership-based organizations.

MHDR 2007 Chapter 3 77

CHAPTER 4 Special groups in the labour force

MHDR 2007 Overview 79 SPECIAL GROUPS IN THE LABOUR FORCE

Special groups in the (20-24 years). However, national defi nitions labour force show considerable variation, and the offi cial defi nition of the youth age group in Mongolia Chapter 3 presented analysis of the links is 15-35 years. Since the working age begins between employment and poverty, and of at 16 years, annual data for the economically overall employment generation trends, as well active population compiled and published by as trends in a few key sectors. Chapter 4 focuses the National Statistical Offi ce begin at that on a different set of links between employment age. However, labour force statistics from the and poverty. Even if job creation accelerates 2000 population census, 2002-2003 Labour and overall productivity and earnings improve, Force Survey and 2002-2003 HIES/LSMS a number of population groups will still face include data for groups aged 15 and older. steep barriers to the training, education and The 2006 School-to-Work Transition Survey decent work that will allow them to lead interviewed youth aged 15 to 29. Thus, data full and productive lives, free of poverty. from different sources use different groups, Targeted Government policies are needed to and analysts must piece together a picture of ensure that these groups of women and men young people in the labour market using age have access to the same opportunities as the groups that are not the same. rest of the population. Some groups such as the elderly, a rapidly growing segment of the Youth employment has been identifi ed population, are not covered by the analysis in as a key issue in Mongolia, with a young this report, but will be the subject of further population and large numbers of new entrants study in the coming year. This report reviews seeking employment opportunities each year. the situation of young men and young women, Almost half (48.7 percent) of the population whose unemployment rates are much higher was younger than 25 years in 2006. That year than that of the rest of the population and who young people aged 16-24 accounted for 22 face diffi cult skills mismatch problems when percent of the workforce. The School-to-Work they enter the labour market. Mongolian Transition Survey collected data on young women do not receive the same treatment as people during November and December of men in the labour market; for example, the 2006. participation of women in higher-paying work Table 4.1 Young people aged 15–29 by labour is considerably lower than their education and force status and educational attainment, skills should allow. People with disabilities Mongolia, 2006 Labour Employ- and migrants also need support in gaining Unem- Inac- force par- ment-to- ployment tivity access to good employment. Proposals are ticipation popula- rate rate presented to improve the employment terms rate tion ratio of all these groups. This chapter also covers an No school 57.9 8.1 53.3 42.1 entirely different set of issues, relating to the fact Primary 50.2 7.7 46.3 49.8 that an unacceptably high number of children Lower second- ary (Grades 26.2 14.9 22.3 73.8 are working at an early age, preventing them 4-8) from receiving the education they need for the Secondary 28.4 21.9 22.2 71.6 future. This chapter therefore concludes with an (Grades 9-10) Vocational 65.4 15.3 55.4 34.5 analysis of options for reducing and eventually technical eliminating child labour in Mongolia. Specialized secondary di- 67.8 8.1 62.3 32.2 ploma 4.1 Youth employment Tertiary and bachelor’s 77.5 11.6 68.5 22.5 Youth profi le degree Master’s de- 79.2 5.4 74.9 20.8 The United Nations and ILO defi ne youth gree and above as the age group 15-24, with breakdowns for Total 39.7 14.0 34.2 60.2 Source: Francesco Pastore. June 2007. “School to work teenagers (15-19 years) and young adults Transition”, ILO Working Paper, Draft.

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The youth unemployment rate is well 39.7 percent were economically active; the above the adult unemployment rate. Youth unemployment rate was 14.0 percent. Males rates in urban areas are alarmingly high. As (55.4 percent) outnumbered females (44.6 is the case with overall unemployment rates, percent) among the unemployed. Among rural youth unemployment rates are lower those employed, 53.7 percent were male than urban, with most youth in the countryside and 46.3 percent were female. By far the working for at least one hour a week on largest proportion (40.6 percent) worked in livestock herding, crop production or family livestock herding. The corresponding fi gure businesses, or reporting a job attachment. for rural areas was 90.5 percent. Another 23.5 percent of young people held jobs in public Figure 4.1 Unemployment rates by age group and administration, the education sector, health urban-rural residence, Mongolia, 2002−2003 services and community services, while 7.6 percent were involved in trading activities. The School-to-Work Transition Survey also sheds light on the distinction between “active” and “inactive.” Most young people who were not in the labour force were students rather than dropouts.

The survey classifi ed those in employment at the end of the transition from school to work according to the status and type of job. For the entire age group 15-29 years, not quite half (46.1 percent) were in Source: NSO of Mongolia: Labour Force Survey 2002- 2003, cited in NSO: The Brief Report on Results of the paid employment. Another one-third (32.4 School-to-Work Transition Survey, Ulaanbaatar, 2007. percent) were unpaid workers in family businesses. One in fi ve (19.4 percent) were Age-specifi c rates from the 2002-2003 operating their own business. The remaining Labour Force Survey indicate that 39,900, respondents classifi ed as employed were in or 1 in 5, economically active youth aged 15 a part-time job or employed but absent from to 24 years were unemployed. Unemployed work during the reference period. youth accounted for 8.7 percent of the population aged 15 to 24, with 9.4 percent of What is striking, however, is the boys and young men and 8.1 percent of girls considerable difference across age groups and and young women classifi ed as unemployed. urban-rural residence. Two-thirds of working Unemployment was more of a problem in the teenagers were employed as unpaid family cities than the countryside, with 44.6 percent workers. Those aged 25-29 (51.5 percent) of teenagers (14–19) and 33.6 percent of were much more likely to be paid employees young adults (20–24) in urban areas classifi ed than those aged 15–19 years (23.9 percent), as out of work and available for employment. as shown in Table 4.2. The distribution also While 56.3 percent of youths were inactive, differs by residence, with 64.4 percent of i.e. neither employed nor unemployed, with respondents in paid employment living in most of these young people in school. urban areas while 68.7 percent of those running their own business were in rural areas. According to the School-to-Work Almost all of those working as unpaid family Transition Survey of 15 - to 29 -year-olds, just members (95.3 percent) lived in rural areas.

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Only small percentages wanted to Table 4.2 Young people at work by age group, Mongolia, 2006 become a technician (7.0 percent) or work in business and trade (4.2 percent). Yet there are Age group not enough jobs in the formal sector of urban 15-29 15-19 20-24 25-29 areas to absorb the young job seekers with Paid work 46.1 23.9 45.3 51.5 a university education. A key challenge is Run own 19.4 8.3 17.7 23.2 fi nding jobs for new graduates. In 2005-2006 business there were 131,100 graduates of secondary Unpaid family 32.4 66.1 35.1 23.0 and tertiary institutions, of whom 72,000 were worker female. Most graduates were from general Part-time job 1.2 0.9 1.5 1.0 secondary schools (100,400). Over the same Employed but period 23,600 graduated from colleges, absent from 0.8 0.9 0.4 1.2 work universities and other institutions of higher education. There were only 7,100 graduates Source: NSO. 2007. The brief report on Result of the School-to-Work Transition Survey. from technical and vocational schools.

Greater numbers of boys and young men As is often the case, new entrants to are in the labour force than girls and young the labour market do not have the education, women. They are more likely to drop out of training and experience required to fi ll job school to help with family herding or seek openings or to start their own business. Some other employment. In rural areas, school are attracted to the higher incomes of overseas attendance for boys drops sharply at an early jobs – often in positions below expectations age and remains lower than for girls at all based on diplomas and degrees. Another levels. Among herding households, there are emerging issue identifi ed by the Ministry of indications that wealthier herders with more Social Welfare and Labour is “brain drain.” animals rely on additional labour from poorer families. Some hire adolescent boys who work There is awareness, by Government, for food and lodging. This informal labour enterprises and workers that public and private market for boys and young men may have training institutions are encountering serious placed additional burdens for unpaid work on diffi culties in providing the level and type of girls and young women. skills training needed for modern enterprises. This is a critical problem for young people. Many of the youth moving to complete Moreover, the mismatch between the training their education in cities, especially provided by existing training institutions Ulaanbaatar, are reluctant to return to the and the skills requirements of the workplace countryside. Links with the global economy appears to be widening. The effects of through information technology make the globalization, rapid changes in technology and traditional lifestyle of a livestock herder the way in which work is now organized have less attractive. Mongolia is experiencing a contributed signifi cantly to this widening skills cultural transformation as globalization and gap. Public training institutions have particular urbanization affect traditional ways of life. diffi culty securing resources that would enable them to provide relevant training for today’s The School-to-Work Transition Survey workplace. Many previously state-owned asked a series of questions about the major enterprises have been partially or fully privatized goals of young people aged 15-29. At the and their equipment upgraded, requiring their top of the list for the “most important” was employees to be knowledge workers. a successful career (17.0 percent) followed by “to be qualifi ed” (19.8 percent) and “to Policy options be happy” (18.9 percent). For those still in school, 60.7 percent planned to continue their Statistical analysis of data from the education. Most indicated a preference for School-to-Work Transition Survey points to a academic subjects and foreign languages.

82 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE number of policy recommendations. Special services and improve information sharing on efforts should be made to increase the returns jobs and skills required. to, and reduce the cost of, education, especially for poor families in rural areas. In addition, Youth employment is very much affected upgrading and reforming the educational by economic growth and general conditions and training system to the emerging needs in the labour market. Macroeconomic polices of the market economy requires a number of and sectoral policies should be designed to interventions, not only by the Government, create decent and productive employment. but also institutions at all levels, including the Policy measures should also be introduced to social partners. Close collaboration between increase the employment prospects of young public institutions, unions and employers’ people, and the fi ndings of the School-to- organizations is the best means through which Work Transition Survey indicate a number of to correct the skills mismatch. groups to be targeted. Among these are: • Teenagers in urban areas, who are the The empirical analysis also highlights most diffi cult to employ; therefore, the existence of a dramatic urban-rural divide, training and supply-side measures taking different forms and along different should be offered dimensions. Rural areas feature lower educational attainment and, consequently, jobs • The least educated group in urban areas, of very poor quality. Particular interventions only a small proportion of whom are should be envisaged to promote educational involved in self-employment, which attainment in rural areas and favour the might be increased by introducing development of more productive agricultural entrepreneurship programmes activities. • Unemployed youth in rural areas, and especially women, who experience very Wage penalties for young people long unemployment spells. Educational, undergoing on-the-job training are a typical training or employment opportunities – compared to other countries. This is because such as public works schemes – should employers pay for the training; therefore, to be made available to those out of the cover training costs they lower wages. This labour market for long periods. acts as a disincentive to the development of effi cient training programmes on a larger • Young people with vocational scale. In the short term, fi nancial aid or diplomas. Several fi ndings highlighted subsidies could be provided to the companies the diffi culties experienced by this offering training. Employers should also work group: They had trouble fi nding a more closely with the Public Employment job and, even when they did, their Services (PES), as well as with the national wages were sometimes lower than educational system, to improve the quality those with compulsory education or and the availability of training. It is likewise below, despite employers expressing necessary to sensitize fi rms in their role as a need for a workforce endowed with trainers, and to the benefi ts they will reap, technical skills. This is an important especially in terms of productivity gains, so issue to be addressed by policy makers that investment in training no longer leads to at all levels. Vocational education and lower wages. training are important ingredients for the development of new and more There is evidence in the report of effi cient production systems and are an young people fi nding their job via informal important alternative for those young networks, despite employers considering this people who do not intend to pursue recruitment method unsatisfactory, and jobs higher education. Policymakers should found in this way incurring a wage loss. This make it a priority to improve the quality indicates a need to revitalize employment of vocational training and, together with

MHDR 2007 Chapter 4 83 SPECIAL GROUPS IN THE LABOUR FORCE

fi rms and unions, link it more to the needs of the local production system. • Support efforts by employers’ A better system linking school and organizations and trade unions to job market, education and on-the-job identify and deliver appropriate training, is needed. The Government, kinds of on-the-job training local authorities, fi rms and unions encouraging employers to offer should contribute to the provision training and employment to young and support of on-the-job and off- people, including dropouts and the-job training and apprenticeship graduates, by offering economic programmes. In general, the extreme incentives dissatisfaction of employers with the • Encourage young people to reassess actual skills possessed by young job their aspirations and expectations applicants indicates the need to improve in line with improved information the quality and content of education. about career prospects in the labour • Support vocational training and re- Recommendation 10 training for young people in growth sectors such as manufacturing, Promote decent and productive work construction and energy through the for young people Employment Promotion Fund • Introduce policy measures to • Encourage youth entrepreneurship increase the employment prospects through business training, of young people based on target microcredit, national campaigns, groups identifi ed by the SWTS business information, improvements in the business environment, youth • Incorporate youth employment networks and support for the in the National Employment informal economy Strategy as part of the MDG-based National Development Strategy, • Pilot business incubators for young including policies for sub-sectors in herders to help them set up their own agriculture, industry and services businesses with entrepreneurship training and business development • Introduce entrepreneurship services programmes for young people involved in self-employment, • Strengthen coordination and including the least educated group planning for youth employment among Government employers, • Provide targeted assistance to young workers, NGOs and others and with women in the labour market, who international partnerships, such as face considerable disadvantages, the Youth Employment Network despite their higher educational attainment. • Develop opportunities for education, training and employment – such 4.2 Women in the labour as through public works schemes market – for young people, with special measures to assist those out of the Throughout this report, data and labour market for long periods, such situation analysis are disaggregated by sex as rural youth wherever possible so as to highlight the gender dimensions of employment issues. This section of the report looks at some of the challenges faced by Mongolian women.

84 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE

Women play a central role in the for 2006 show a slightly different percentage Mongolian economy. According to the most of females, they follow a similar distribution recent National Statistical Offi ce data, in across sectors. 2006 women made up 51.4 percent of the economically active population and 51.3 Table 4.3 Female employment representation percent of the employed. As illustrated in by industrial classifi cation, Mongolia, 2002- 2003 and 2006 Figure 4.2, the labour force participation of women is not signifi cantly different from that Percentage female of men. Labour Population Industrial classifi cation Force Sur- Employment Figure 4.2 Age-specifi c labour force participation vey, 2002- 2006 rates by sex, Mongolia, 2002–2003 2003

Agriculture, hunting and 46.3 47.1 forestry Mining and quarrying 26.6 36.0 Manufacturing 54.6 54.5 Electricity, gas and water 28.8 45.6 supply Construction 26.0 44.3 Wholesale and retail trade, repair of motor vehicles, motorcycles and 56.1 59.8 personal and household goods Source: NSO, ADB. 2004. Main Report of the Labour Hotels and restaurants 66.4 66.8 Force Survey 2002-2003,Ulaanbaatar, Table 36, p. 45. Transport, storage and 26.0 37.4 communication Nevertheless, women face barriers in Financial intermediation 52.5 59.7 Mongolian society and in the labour market, Real estate, renting and 41.0 50.1 examined in this section of the report. In business activities 2006 there were 72,219 female-headed Public administration households, or 11.4 percent of the total. Study and defence, compulsory 33.3 44.2 groups conducted as part of the Participatory social security Poverty Assessment indicate that single- Education 68.0 67.2 parent households continue to be especially Health and social security 77.3 68.5 Community, social and vulnerable. In some cases, women are left 50.1 48.5 personal services alone with children due to the death of their Private households and 46.0 52.0 husband or divorce. Other women in herding employed persons households choose to live separately in order Extra-territorial organiza- 34.5 53.6 to be closer to schools and health care. tions Total 48.0 51.3 While the distribution of employment Source: NSO. ADB. 2004. Main report of the Labour Force by industrial classifi cation shown in Table 4.3 Survey 2000-2003, Ulaanbaatar, 2004, Table 41, p. 52 and is broadly similar for women and men, with NSO. 2007. Population Employment 2006. many working in agriculture and trade, there are some sectors in which either women or The occupational distribution of men have a dominant share. According to the employment by sex in Table 4.4 indicates 2002-2003 Labour Force Survey, women held that a large share of men and women were most jobs in hotels and restaurants, education employed as agricultural workers. Most were and health and social security, while men herders. However, women represented a larger were more likely than women to work in share of clerks, service workers, professionals mining, construction, transport and public and technicians. The data for 2002-2003 show administration. Although data from the NSO that women were much less likely to work as

MHDR 2007 Chapter 4 85 SPECIAL GROUPS IN THE LABOUR FORCE machine operators. Only a third of top posts Table 4.5 Classifi cation of currently employed as legislators, managers and offi cials were by status in employment and sex, Mongolia, women; however, more recent fi gures show 2002–2003 that women held 38.6 percent of these jobs in Distribution of Percentage Status in employment employment 2006. Almost two-thirds of craft workers were female men. Male Female Paid employee 37.1 41.8 50.9 Table 4.4 Occupational classifi cation of Employer 0.7 0.4 34.5 currently employed by sex, Mongolia, 2002– Member of cooperative 0.3 0.2 58.1 2003 Own-account worker 43.4 25.7 35.3 Distribution of employ- Unpaid family worker 18.4 31.7 61.4 Occupational clas- Percentage ment Other 0.1 0.2 64.8 sifi cation female Male Female Total 100.0 100.0 48.0 Legislators, senior Number 448900 413600 862500 offi cials and man- 5.0 2.6 32.4 Source: NSO, ADB. 2004. Main report of the Labour Force agers Survey 2002–2003, Ulaanbaatar, Table 10, p. 116. Professionals 8.2 16.1 64.4 Technicians and as- 3.5 6.0 61.2 And across sectors, women are less likely spciate professionals to be in managerial positions in spite of higher Clerks 1.1 3.1 72.2 levels of educational attainment. To cite one Service workers 8.0 14.9 63.2 example, the education sector workforce was Skilled agricultural 47.0 43.8 46.2 68 percent female in 2006. Female teaching workers staff represented 94 percent of the total in Craft and related 9.9 5.7 34.7 trade workers primary schools, 71 percent in middle and 68 Plant and machine percent at senior levels. Women accounted for operators nd assem- 11.6 1.1 8.0 60 percent of the teachers at vocational and blers technical schools and 52 percent in colleges Elementary occupa- 5.3 6.6 53.4 and universities. Yet the majority of school tions principals were male. Others 0.4 0.1 18.7 Total 100.0 100.0 48.0 Statistical analysis by the ILO of the Number 448,900 413,600 862,500 School-to-Work Transition Survey examined Source: NSO, ADB. 2004. Main report of the Labour Force gender wage differentials. On average, Survey 2002-2003, Table 42, p. 53. female wages are not lower than male Data for status in employment in Table wages. However, this hides what appears to 4.5, from the Labour Force Survey, show that be discriminatory behaviour against women, women were much more likely to be unpaid since they possess characteristics that would family workers than men. Almost two-thirds otherwise lead to higher productivity than of own-account workers were men. While the men. By decomposing the gender wage statistics for employers may not be reliable differential the School-to-Work Transition given the small numbers, the data show that 7 Survey analysis concludes that if women out of 10 were men in 2002-2003. and men received equal pay for equal work, the wages of women should be 11.7 percent Given the distribution of employment by higher. After controlling for the different sector and occupation, it is not surprising that characteristics of women and men, the there is a wage gap in Mongolia. Women are wages of women should be on average 22 under-represented in sectors with higher pay. percent higher than men.

86 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE

A National Statistical Offi ce survey of Although women are key actors in the employers and their employees in 2000-2002 informal economy, they face disadvantages found that, while 48 percent of employees and obstacles such as family obligations surveyed were women, they held only 35 and inadequate credit. These limit the types percent of managerial positions. In addition, of activities that women select to provide this survey found that men in managerial employment and income. Women were placed positions received salaries nearly double those at a disadvantage during the transition from of women in similar posts. state ownership to private property when assets formerly owned by the state, including Despite gender stereotypes and wage livestock and housing, were registered in the gaps, there does not appear to be a perception names of household heads, predominantly that the job market is characterized by gender men. This left many women without collateral discrimination, according to a UNIFEM study for loans or credit unless they obtained conducted in 200263. However, another study permission from the man who headed the of young people indicated that 1 in 10 had household, thus hampering start-ups and encountered discrimination in recruitment on expansion of business, and making it more the basis of sex. Other forms of discrimination likely that women operate in the informal appear to be based on age and physical economy rather than the formal sector66. Since characteristics64. lack of capital limits the choice of business, women play a dominant role in retail trade, both The Labour Law of Mongolia has explicit as street vendors and in personal services. provisions to protect against discrimination based on age or sex. An apparent exception The School-to-Work Transition Survey was the provision of the Labour Law setting found that young women face important the retirement age of women at 55 versus 60 disadvantages in the labour market, despite for men. Under the Pension Law as amended their higher educational attainment. They in 1990, women with four or more children can fi nd employment at the same rate as men, but retire early with a pension to provide “social when they are unemployed, it is for longer care.” While this was supposed to be done periods - and when a job is found, it is for with agreement of the employee, the provision lower wages. This is clearly in opposition made women vulnerable to being “retired” to their aspirations and could have dramatic without their consent. Because pensions are consequences for the stability of households typically insuffi cient to make ends meet, retired and society if not resolved. women often seek work elsewhere. Table 4.6 shows that in recent years Women frequently face diffi cult the Government has restored the number of conditions in informal economy employment. children attending kindergarten to a higher The educational level of females is higher level than in the socialist era, an impressive than that of males in Mongolia, with large achievement. At the same time, however, the numbers of women overqualifi ed for jobs in number of very young children being cared the informal economy. Measures for the share for in creches is still quite low, posing a direct of women in informal activities vary according obstacle to labour force participation for many to the defi nition, coverage and source: 69 mothers. percent according to a USAID study in 1999; 54 percent in a UNDP report in 2004; and 45 percent in the 2002-2003 report65 of the Labour Force Survey.

63“Women in Mongolia: Mapping Progress Under the Transition”, UNI FEM, New York, 2002 64 ADB, WB. 2005. Gender Issue in Mongolia 66UN. UNDAF for Mongolia 2002-2006, Draft for discussion, Ulaan- 65 ADB, WB. 2005. Gender Issue in Mongolia baatar, March 2001, p. 14 cited in Elizabeth Morris: The informal sector in Mongolia: Profi les, needs and strategies, ILO, Bangkok, 2001, p. 73.

MHDR 2007 Chapter 4 87 SPECIAL GROUPS IN THE LABOUR FORCE

Table 4.6 Number of children in pre-school, Figure 4.3 Unemployment rates by age group Mongolia, 1990, 1995, 2000 and 2006-2007 and sex, Mongolia, 2002-2003

Number of children 1990 1995 2000 2006-2007 in: Creches 21600 4000 1900 4400

Kindergartens 97200 64100 79300 94700

Source: NSO. Mongolian Statistical Yearbooks, 1999, 2003 and 2006.

Women carry a double burden with responsibilities at work and at home. The 2002-2003 Labour Force Survey asked all respondents about non-economic activities and unpaid work. The survey showed that 92 Source: NSO of Mongolia: Labour Force Survey 2002- 2003, cited in NSO: The Brief Report on Results of the percent of the population aged 15 and older School-to-Work Transition Survey, Ulaanbaatar, 2007. participates in activities such as cooking, cleaning, washing and caring for children and 4.3 Reducing labour market elders. Just over half are women spending, on average, 25 hours a week on these activities. gender inequalities However, the average hours are much longer for women (32 hours) than for men (18 hours). In the education sector boys and men In rural areas, women devote twice as many have lagged behind girls and women in hours to non-economic activities than men – recent years, with women outnumbering men 37 hours compared to 19 hours. The number of at higher levels in the education system. To hours on these activities was longer in winter date, however, educational attainments of (30 hours) than in other seasons – spring (25 women have not translated into a more equal hours), summer (22 hours) and autumn (22 distribution between the sexes at higher levels hours)67. of decision making. Women remain under- represented in management and khurals. There Unemployment rates calculated from the also exists evidence of gender stereotyping, Labour Force Survey did not show signifi cant with working women taking on traditional differences by sex. For Mongolia as a whole, roles in the labour market. the unemployment rates for men (14.2 percent) and women (14.1 percent) were virtually the In order to ensure that women and same. In urban areas the male unemployment men can participate in and benefi t from rate (19.3 percent) exceeded the female development on an equal footing, it will unemployment rate (18.1 percent), while the be necessary to mainstream gender into all reverse was the case in rural areas: 9.7 percent aspects of the planning and implementation for men and 10.3 percent for women. The age- of policies and programmes that affect the specifi c rates are shown in Figure 4.2. labour market and employment issues. This will, in the fi rst instance, require data to be disaggregated by sex and planning and evaluation to include gender analyses to identify gaps and inequalities. Secondly, at the planning and implementation stages of policies, programmes and projects, the two- pronged strategy for the promotion of equality between men and women at work involves efforts: (i) to bring gender issues into the 67Elizabeth Morris and Ole Bruun. 2005. Promoting employment oppor- mainstream in all, including the priorities and tunities in rural Mongolia: Past experience and ILO approaches, ILO, Bangkok, p. 175. needs of men and women in all action; and

88 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE

(ii) to implement gender-specifi c measures to also pointed to the benefi ts of women’s empower one or the other sex, generally but business associations as well as those for both not always women, as they are more likely to sexes. experience gender-based social, political and economic disadvantages. This should include Young women in the labour market, the promotion of women to decision-making whose problems were highlighted above, roles and senior management. would benefi t from a number of measures to reduce their disadvantages – most of Box 10 which would be of benefi t to other women in the work force as well. First, equal ADB and WB country gender pay measures should be introduced and assessment of employment enforced for equal characteristics. Second, to ensure that these measures work, the legal Distortions in the labour market are framework and its application mechanisms leading to ineffi ciencies in investments should be strengthened, and provision made in education and to the loss of potential to ease women’s access to legal assistance contributions from women to economic when reporting discriminatory practices of growth. Measures that can be taken employers. Local authorities could provide to address gender gaps include (i) such assistance. It is also important to challenging gender stereotypes in implement affi rmative actions to help women occupations by targeting employment overcome barriers and achieve better jobs, and skills training for women in non- better career prospects, better maternity leave traditional sectors with potential for provisions and childcare facilities, and support growth; (ii) enforcement of anti- schemes in favour of discouraged or long-term discrimination legislation; (iii) building unemployed mothers. Part-time work should awareness of how to address harassment be explored as a way of helping young women of women in the workplace; and (iv) and men to fi nd a better balance between their increasing skills in analyzing and lives and their work. monitoring gender gaps in Government economic policies and programming. Gender mainstreaming should also lead to measures that allow women access Source: ADB and WB. 2005. Country to new jobs emerging in growth sectors Gender Assessment Mongolia, Manila. with higher pay, such as fi nance, mining and public administration (see Table 4.7). Special efforts should be taken to For some time, however, large numbers of ensure that women do not lose their jobs as working women are likely to be employed professionals and do share equally in the in livestock herding. It will be important to “formalization” of the informal economy encourage the participation of women and and small and medium enterprise (SME) men in local economic development, as well development. The gender assessment as to encourage girls and boys to participate conducted by the ADB and World Bank noted in training for herding businesses and non- that women may not benefi t in entrepreneurial herding employment in rural areas. Steps can roles as micro-enterprises develop into SMEs. be taken to enlist the involvement and support Research in Mongolia and elsewhere indicates of women’s NGOs in programmes for job an inverse relationship between the size of the creation through public works and community enterprise and the participation of women. services in both the city and countryside. In this regard, it is important to ensure equal Finally, measures should be put in place to free access by men and women to productive women from their double burden of economic inputs, training opportunities and business activities and household tasks, through shared development services. The gender assessment responsibilities, childcare facilities and other means.

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Table 4.7 Average monthly wages and salaries by industrial classifi cation, Recommendation 11 Mongolia, 2006 Thou- Annual Reduce gender inequalities in the sands of percent- Industrial classifi cation labour market Togrogs age change 2006 2003-2006 • Establish requirements that data Agriculture, hunting and 65.8 1.7 are disaggregated by sex and that forestry planning and evaluation include Mining and quarrying 146.1 7.0 gender analyses to identify gaps and Manufacturing 124.1 4.2 inequalities Electricity, gas and water 139.5 3.0 supply • Mainstream the gender perspective Construction 132.8 5.1 into all aspects of planning and Wholesale and retail trade, implementation of policies and repair of motor vehicles, mo- 85.7 0.8 programmes that affect the labour torcycles and personal and household goods market and employment issues Hotels and restaurants 123.6 6.0 • Introduce and enforce measures Transport, storage and com- for equal access, equal opportunity, 129.7 -1.2 munication equal pay for work of equal value Financial intermediation 255.5 22.9 and support the promotion of women Real estate, renting and 91.6 2.3 to decision-making roles and senior business activities management Public administration and defence, compulsory social 141.3 10.2 • Actively pursue other security recommendations presented Education 123.6 6.0 elsewhere regarding reducing Health and social security 116.5 12.3 child labour, school dropout rates Community, social and 91.3 8.1 and alcoholism, problems that personal services disproportionately weaken the Note: Annual growth rates are measured in constant employability and earnings of Togrogs (2006=100). Mongolian men Source: Authors calculation based on NSO. Mongolian Statistical Yearbook 2006 • Take steps to allow women access to new jobs emerging in growth sectors with higher pay such as fi nance, mining and public administration • Enlist the participation and support of women’s NGOs in programmes for job creation through public works and community services in both the city and countryside. • Put into place measures to free women from their double burden of economic activities and household tasks through shared responsibilities, child care facilities and other means.

90 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE

4.4 People with disabilities Limited social and economic infrastructure in rural areas represents a Among the challenges faced in challenge in providing services to people with placing people with disabilities into decent disabilities who are geographically dispersed. work are the urgent need for better data to Accessibility remains a major barrier, not identify, monitor and evaluate policies and just in terms of physical access to buildings, programmes; greater access to information workplaces and transport, but also regarding and services; and strengthened capacity for use of employment services, vocational service delivery, employment promotion training and communications technology. In and skills development for persons with addition, people with disabilities often do not disabilities. Despite challenges with the data, have equal access to basic services such as some statistics on the percentage of people education, health care and social protection, with disabilities who are employed and which in turn has long-term ramifi cations unemployed are presented in Table 4.8. It is not for training and work. As yet, there is no clear whether the unemployed include women legal obligation on the part of educational and men who are not in the labour force. institutions, training providers and employers to provide reasonable accommodation. Table 4.8 Employment ratio and the Discriminatory attitudes toward people with proportion of unemployed and inactive disabilities remain and are a signifi cant barrier among people with disabilities aged 15 years to mainstreaming and integration. and older by sex, Mongolia, 2004 Percentage of people with disabilities While the Government provides Unemployed vocational rehabilitation services through Employed Total and inactive the National Rehabilitation Centre, limited Male 28.3 71.7 100.0 capacity exists for supporting access to mainstream services for training and Female 24.0 76.0 100.0 employment. The Centre is not able to serve Total 26.4 73.6 100.0 effectively people with disabilities in rural Source: NSO. Registration of people with disabilities, 2004. areas. According to the Ministry of Social The offi cial defi nition of disability is Welfare and Labour, there are more than provided in the Mongolian Social Security 40 non-government organizations working Law for People with Disabilities 1995, on behalf of people with disabilities. While amended in 1998 and revised in 2005. This most NGOs work to improve employment states: “Persons with disabilities are those opportunities, a need exists for greater with limited physical or mental abilities, either coordination in promoting both self- genetically inherited or acquired during life, employment and wage employment, including persons born with deformations or disability greater focus on mainstreaming in the formal caused by illness or accident which limits sector and creating opportunities for income full ability to work, mute persons or persons generation in the informal economy. Most offi cially diagnosed with sight, hearing, or are located in Ulaanbaatar. Services in rural body or mental disabilities.” areas are limited, with a focus on supplying equipment rather than promoting sustainable One of the main challenges to employment opportunities. mainstreaming people with disabilities is According to the National Statistical the lack of accurate data, meaning that it is Offi ce, there were 82,300 working-age diffi cult to assess the demand for services, persons with disabilities in 2006, i.e. 50.8 per and therefore, to plan effi ciently. Mongolian 1,000 people of working age. Just 13 percent agencies agree that the existing data on were employed68, although the Ministry of disability is incoherent and unreliable. Social Welfare and Labour estimates that Different agencies collect statistics dependent on services offered. 68NSO. 2006. Population employment, Ulaanbaatar.

MHDR 2007 Chapter 4 91 SPECIAL GROUPS IN THE LABOUR FORCE roughly 80 percent are capable of holding a disabilities is a quota system under the Labour job69. Only an estimated 20 percent of persons Law, which applies to companies with 50 or with disabilities in need of vocational training more employees. Levies are paid into a special have access, with just 303 involved in training fund to be used exclusively for training and in 2006 through the Labour and Social employment of persons with disabilities. Welfare Offi ces in aimags and districts. The The Mongolian Social Security Law for National Rehabilitation Centre involves 120 People with Disabilities contains provisions to 200 persons with disabilities each year in for mainstreaming vocational training and segregated training for nine vocations. Of the supporting enterprises and organizations 310,300 persons receiving a pension from the employing persons with disabilities. The Social Insurance Fund in 2006, 58,700 were Law on Employment Promotion, enacted persons with disabilities70. in 2001, includes measures to assist job seekers with disabilities through various Mongolia has ratifi ed two key ILO services such as job placement, vocational Conventions related to discrimination training, entrepreneurship training, business and people with disabilities: Vocational incubators, public works and unemployment Rehabilitation and Employment (Disabled benefi ts. However, there does not appear to Persons) Convention 1983 (No. 159) and be a systematic method for monitoring and Discrimination (Employment and Occupation) evaluating the participation of persons with Convention 1958 (No. 111). disabilities in these programmes. An important international develop- ment was the adoption by the United Nations Responding to the challenge of in December 2006 of the Convention on the dispersed populations in rural areas, the Rights of Persons with Disabilities. This Government is planning to establish a spearheads the trend toward mainstreaming Community Development Division within disability in all aspects of society. It the National Rehabilitation Centre as reaffi rms equal human rights for persons part of a overall redevelopment of the with disabilities and provides for reasonable Centre71. One of the main responsibilities accommodations related to their integration of this new division will be to implement into vocational training, employment community-based rehabilitation projects programmes and service delivery. and programmes and to build capacity Mainstreaming will be crucial in Mongolia, within community organizations for where it is not cost-effective to pursue dual disabled persons. Moreover, the Centre, systems. While this has yet to be signed or as part of its physical renovation, plans to ratifi ed by Mongolia, these concepts have upgrade its technical capacity to serve as been refl ected in recent Government policies a resource centre to provide assistance to such as the Mongolian Social Security Law other organizations and training institutions for People with Disabilities. Other good to promote the inclusion of disabled persons. practices in Mongolia are the National The Government has requested international Programme on Promotion of Persons with support and assistance in building its Disabilities and the Strategic Guidelines capacity to meet these objectives. for Improving Management of the National The National Programme on Promotion Rehabilitation Centre. of Persons with Disabilities, adopted in 2006, covers employment and training. Policy options It is in line with the concept of the 2000 The main legal mechanism to promote Biwako Declaration to “involve the State, formal employment of persons with civil society and people with disabilities in building a society where opportunities of a 69MSWL. Updated 2007. The status of training and employment policies dignifi ed life and development for people with and practices for people with disabilities in Mongolia, Draft, ILO. 70 NSO. Mongolia Statistical Yearbook 2006, Ulaanbaatar, p. 341. 71As set out in Annex 1 to Decree #81 of 4 August 2006 by the MSWL

92 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE disabilities are increased and their rights are Skills are crucial to success in any sector, and fully respected.” An Action Plan for Promoting current data suggest that strong measures are Employment of People with Disabilities needed to ensure equal access and opportunity and Providing them with Equality to Work to skills training. 2007-2008 includes several components: (i) developing and implementing the legal Recommendation 12 environment on promoting employment of people with disabilities; (ii) improving equal Open opportunities for persons with opportunities for people with disabilities; disabilities in the labour market (iii) enhancing skills and capacity of people • Mainstream people with disabilities with disabilities and their representative into programmes for employment organizations; and (iv) expanding information and employability and improve and publicity. access to information and services • Support the development of The Labour and Social Welfare Agency associations of people with under the Ministry of Social Welfare and disabilities and the NGOs that serve Labour is responsible for implementing them, so that they can participate in and monitoring many of the provisions for decisions that affect their ability to employment in laws and policies, including fi nd decent work the collection and allocation of fees for the • Focus particular attention on Special Fund on Employment Promotion employment for people with for People with Disabilities. Despite the disabilities in rural areas, where establishment of a National Coordination access is still very constrained Committee on Disability, the work of agencies • Work collaboratively with and institutions in enhancing employment employers’ associations and trade opportunities for persons with disabilities can unions to strengthen and advance be made stronger and more coherent. services, especially efforts to mainstream persons with disabilities Overall, Mongolia will need to build in existing programmes and activities on its past experience and new policies including measures to ensure equal to mainstream people with disabilities access to skills training for people into programmes for employment and with disabilities employability and to improve access to information and services. Future efforts should support the development of associations of 4.5 Migrant workers people with disabilities and the NGOs that serve them, so that those with disabilities Domestic and international migration can participate in decisions that affect their has emerged as a major survival strategy for ability to fi nd decent work. In collaboration Mongolians confronted with falling incomes. with employers’ organizations and trade unions, the NGOs and disabled people’s Internal migration organizations should work collaboratively to As of 2006, some 60.9 percent of strengthen and advance services, especially Mongolia’s population was classifi ed as efforts to mainstream persons with disabilities urban, most living in and around the capital of in existing programmes and activities. To Ulaanbaatar and a few other large cities such increase employment opportunities for as Erdenet and Darkhan72. Population data for disabled persons, technical assistance and Mongolia point to a gradual increase in the awareness building targeting employers is urban population, illustrated in Figure 4.3. needed, especially those not covered by the Following the privatization of herds, many quota. Strategies for ensuring the participation moved to the countryside, with a consequent of disabled persons in self-employment and the informal sector must be developed. 72NSO. Mongolia Statistical Yearbook 2006, Ulaanbaatar.

MHDR 2007 Chapter 4 93 SPECIAL GROUPS IN THE LABOUR FORCE fall in the share of people living in urban Figure 4.5 Population increase of Ulaan- areas. This trend was sharply reversed at the baatar 1989-2006, broken down into natural time of the three dzud during 1999–2002, increase and net in-migration73 as many herders who lost their livestock moved to semi-urban and urban areas in search of a livelihood. Another reason for migration was to move closer to services for education and health. Some migrants wanted to take advantage of the land privatization in urban areas. The process of migration and urbanization has continued.

Figure 4.4 Share of population in urban areas and annual urban growth, Mongolia, Source: NSO. 2004. “Mongolia in a Market System” 1990–2006 Statistical Yearbook 1989-2002; Authors’ calculations for NHDR 2007.

This explosion of urban population not only threatens the standard of living of all by stretching the already cash-strapped urban services beyond limit, it also fails to meet the migrants’ expectations of fi nding decent jobs -- the principal motivation for migration. Thus, a recent survey of the migrant population in the ger districts of Ulaanbaatar has found that only about 32 percent of the sample population lived on stable income such Source: NSO. Mongolian Statistical Yearbooks, 1998, 1999, 2001, 2002, 2006. as salary or pension. Most of these were retired senior citizens living on pension The aggregate urbanization data income. A staggeringly high 53 percent of presented in Figure 4.4 do not capture the the respondents registered themselves as full extent of internal migration that has “unemployed,” and 80 percent of households taken place in Mongolia, because there has reported one or more unemployed adult 74 been a substantial amount of migration from family member . The report points out that aimag centres to Ulaanbaatar – in other these people were not necessarily unemployed since they were not entirely without jobs, words, urban-urban migration – that is not but they nonetheless consider themselves captured in this fi gure. Figure 4.5 illustrates unemployed for not having a full-time job the total population change in Ulaanbaatar or a stable income. In other words, they may since 1989 and breaks down the increase have some employment, but the quantity and into the contribution of natural increase quality were not considered satisfactory75. (number of births minus number of deaths) and net in-migration. The table shows that Poor people moving from rural areas of 69 percent of Ulaanbaatar’s growth in to aimag centres or the capital face special population during this period was due to hardships due to lack of registration needed for in-migration, which accounted for 294,000 access to basic services, and lack of skills and of the total increase of 427,000. Looked qualifi cations to obtain gainful employment. at another way, 11 percent of Mongolia’s Some face discrimination because they are current population are in domestic migrant poor and unable to afford appropriate dress families in Ulaanbaatar. This gives a clearer 73 “Natural increase” refers to the difference between the number of picture of the magnitude of the employment births and the number of deaths among Ulaanbaatar’s population. Net in-migration is the source of the remainder of the population increase. challenge that internal migration has posed 74 NSO. CHRD. 2005. “Participatory Poverty Assessment, Ulaanbaatar in Ulaanbaatar. ger area” 75See fuller discussion of this issue on pp 52-53. 94 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE for job interviews. Many end up in the International migration informal economy, selling goods such as fl our and fi rewood in local markets. Migrants also In addition to migrating to Ulaanbaatar, fi nd manual work such as carrying goods for an increasing number of Mongolians have others. Some work as cleaners in buildings gone abroad to look for employment in recent and on streets. Others face problems due to years. Despite more rapid economic growth, their age. Mongolians continue to migrate in search of employment. The Government has established Data from the 2006 School-to-Work a framework and procedures for international Transition Survey tell a bit more about the migration through a “Law on receiving migration of the population aged 15-29. foreign workers and sending labour abroad,” The proportion of youth who were migrants adopted in 2001 with amendments now under was 17.1 percent. Many were located in review. This set up a system to facilitate Ulaanbaatar (21.2 percent), with a similar employment in other countries through share going to aimag centres. The proportion Government-to-Government agreements and moving to soum centres was 16 percent, with inter-organizational contracts. The purpose of those going to rural areas accounting for 8 this legislation is to manage labour migration percent. While rural-urban migration has and protect migrant workers. proven benefi cial in the sense that workers and families move to places where opportunities Despite the fact that some migrants are for employment and earnings are better, the now fi nding positions through offi cial channels impact on rural sending areas can be negative, and registered agencies, many travel through as there is a tendency for better educated rural irregular channels with support from a growing youth to migrate in higher numbers than others. number of private intermediaries. These include Data from the survey show that the share of some large companies that advertise services in-migrants increases with education level: through local media and smaller operations that no school (12.6 percent), primary school (9.6 operate informally and illegally. percent), bachelor’s degree (26.7 percent) and master’s degree (25.0 percent). This means Some estimates place the number that the migrant population from rural areas of Mongolians working abroad at around is relatively educated, and raises the danger of 100,000. Many live in the Republic of Korea, an internal “brain drain.” United States, Japan, Taiwan (China) and the European Union. While we do not have As is usually the case, the most common an accurate time series for international reason (64 percent) given for migration was migration given the fact that this is a complex to move with the family. This response was phenomenon – often beginning with visas even higher for women (68.9 percent). The for tourists and students – we do have more household head generally moves in search of information from research by the Mongolian gainful employment, accompanied by family Population and Development Association members. The next most important reason for under the supervision of the Ministry of migration given by young respondents in the Social Welfare and Labour, with support School-to-Work Transition Survey was for from UNFPA. This study, conducted in 2004, education and training, accounting for 17.2 focuses on three countries and highlights the percent of male migrants and 14.0 percent of different characteristics of migrants and work. female migrants. This was followed by a job offer: 14.0 percent for males and 8.9 percent It is diffi cult to generalise from the for females. The remainder migrated in search research, given the different characteristics of of a job, without any prearranged offer. the migrants in the three countries. However, the study does conclude that migration is likely to increase over the coming years. While a number of factors contribute to this stream of women and men seeking jobs abroad, the

MHDR 2007 Chapter 4 95 SPECIAL GROUPS IN THE LABOUR FORCE process is fuelled by differentials in earnings. Table 4.10 Educational attainment of Mongolian Motivated by unemployment and poverty at migrants in the Republic of Korea, Czech Republic home, migrants seek to improve earnings, and the United States, 2004 education and skills abroad. According to the Educa- Republic of Korea Czech Republic United states research, average monthly wages and salaries tional To- Fe- To- Fe- To- Fe- attain- Male Male Male of migrant workers was US$1,115, with ment tal male tal male tal male higher amounts earned by men (US$1,395) Primary 2.8 2.8 2.8 1.0 0.0 1.5 2.9 1.5 5.7 than women (US$827). As shown in Table or less 4.9, the amounts differed considerably Incom- plete 10.7 12.7 8.3 3.5 5.7 2.3 2.9 4.5 0.0 across the three countries. It is interesting to second- note the correlation between average wages ary and recruitment fees paid to intermediaries com- pleted 24.7 27.2 21.7 47.0 48.6 46.2 30.5 34.3 22.9 at the time of the study: Republic of Korea second- US$4,000+, Czech Republic US$1,000-1,500, ary and the United States US$4,000. Techni- cal and 12.5 11.8 13.3 22.0 20.0 23.1 5.9 7.5 2.9 Table 4.9 Average monthly earnings of profes- sional migrants in the Republic of Korea, Czech Incom- Republic and the United States, 2004 plete or com- Distribution Destination country pleted 49.4 45.5 53.9 26.5 25.7 26.9 57.8 52.2 68.5 of migrants Republic of higher by US dol- Czech Republic United States Korea educa- lars per tion month Number % Number % Number % Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 <250 0 0.0 46 24.9 0 0.0 Source: MSWL, UNFPA, MPDA. 2005. Status and Consequences of Mongolian Citizens 250-500 12 3.2 120 64.9 0 0.0 Working Abroad: Survey Report. 500-750 111 29.3 9 4.9 4 4.5 750-1000 139 36.7 4 2.2 3 3.4 Many of the migrants do not have visas 1000+ 100 26.4 4 2.2 82 92.1 or permits to reside and work in the receiving Did not country. Irregular status places them at risk want to 17 4.5 2 1.1 0 0.0 say and lowers their chances of being covered Total 379 100.0 185 100.0 89 100.0 by social security, social services and health Mean care. Where some protection is provided by monthly 1238.5 418.5 2037.6 countries of destination, many migrants are earnings Source: MSWL, UNFPA, MPDA. 2005. Status and not aware of their rights and entitlements. Consequences of Mongolian Citizens Working Abroad: Survey report, Table 5.7, p. 44. Remittances make an important contribution to families, communities and Most migrants are young people who the economy in Mongolia. Almost all send have completed their secondary education. The money home: 87.0 percent from the Republic majority rely on informal networks of family of Korea, 76.5 percent from the Czech and friends, while a few use intermediaries Republic and 62.8 percent from the United to fi nd jobs. Others rely on non-government States. However, a great deal is spent for organizations and religious groups. The fees consumption purposes or loan repayments, vary substantially according to the destination rather than for investment. An important and intermediary. Services and conditions contribution of remittances is investment that are promised are not always delivered. in education and training for the following Migrants work in a number of different sectors, percentages of migrants: 23.4 percent from the with many employed in manufacturing, Republic of Korea, 5.0 percent from the Czech services, trade and construction. Conditions of Republic and 13.7 percent from the United work vary, but migrants often fi nd themselves States. Some migrants encounter problems in unsafe workplaces and with inadequate in transferring remittances back to Mongolia. accommodations. The amount going through offi cial channels

96 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE was estimated to be US$153.6 million in the importance of promoting a “level playing 2006. Estimates show that another US$76.6 fi eld” between migrant labour and domestic million was transferred out of the country by workers. The press reports some foreigners people working in Mongolia. working for 10 hours a day and seven days a week.77 By encouraging legal recruitment Table 4.11 Workers’ remittances through offi cial through regular channels, and application of channels, Mongolia, 2003-2006 (in Millions of the labour law to migrant workers, Mongolian US dollars) workers are less likely to be disadvantaged 2003 2004 2005 2006 in terms of the hours and conditions of work Workers’ accepted by foreigners. remittances 74.3 146.3 133.8 77.1 (net) Policy options Credit 128.6 195.4 174.2 153.6 Debit 54.3 49.1 40.4 76.6 The employment problem is one of the Source: NSO. Mongolian Statistical Yearbook 2006, Table most serious predicaments faced by the migrant 14.13, p. 255. population. A study of internal migration carried out by the National University of The research points to social benefi ts Mongolia recommended a number of steps to of migration in terms of additional income, ease the problem: improving the functioning international experience, better education and of labour market; developing SMEs; new skills. Disadvantages cited by respondents encouraging self-employment; opening include foregone opportunities for education centres for counselling and information; and marriage as well as homesickness and encouraging private educational institutions; stress. Other migrants reported greater use of and others. Many of the measures identifi ed alcohol, cigarettes and drugs and exposure to for rolling back informality would also be sexually transmitted diseases. benefi cial to migrants. The Law on Sending Workers Abroad However, one labour market issue and Employing Foreign Workers, adopted specifi c to the migrant population is the in 2001 and now under review, outlines registration system. Labour mobility was the conditions under which employers may deliberately restricted in socialist times, as hire foreigners in Mongolia, including rural people were required to obtain written quotas and fees. Employers in some sectors permission from local authorities or individual such as construction, roads and mining workplaces in order to move into urban areas. are recruiting skilled workers from other Without the necessary paperwork, migrants countries, including technicians from China were not considered offi cial residents of and Russia. The number of foreign workers an urban area and were deprived of access is thought to exceed the 14,210 permits to all social services, as well as to formal issued or renewed in 200576. Information employment opportunities. The Constitution about the jobs fi lled by foreigners is a useful of 1992 sought to change all that, allowing guide for setting priorities in revising the people the right to choose wherever they curriculum for technical and vocational wanted to live and work. However, the education and training in Mongolia. remnants of the old system still seem to exist. Employers must pay double the minimum For instance, a recent survey of migrants in wage to employ foreign workers. Levies the ger districts of Ulaanbaatar has noted that going to the Employment Promotion Fund the “inability to obtain transfer papers is an are intended to assist Mongolian workers additional obstacle to getting employment for in fi nding new jobs through placement and the poor migrants from rural areas.” These training. International experience points to artifi cial impediments to the employability of 76 WB. June 2007. Mongolia, Building the Skills for the New Economy, Report 40118, Human Development Unit, East Asia and Pacifi c 77 John Garnaut, 13 August 2007. “Second wave of Chinese invasion” Region, p. 15. Sydney Morning Herald.

MHDR 2007 Chapter 4 97 SPECIAL GROUPS IN THE LABOUR FORCE migrants must be removed so as not to make an already diffi cult problem more intractable. Recommendation 13 Expand employment and ensure With growing numbers or workers protection for migrant workers seeking employment abroad, it will be necessary to continue efforts to manage • Eliminate obstacles to registration labour migration and protect migrant by internal migrants, to ensure their workers. This includes such support as the unimpeded access to labour markets regulating recruitment agencies, assisting and social services with employment contracts, entering into • Target the ger areas of Ulaanbaatar, bilateral agreements with foreign countries, where the proportion of migrants is offering pre-departure training, improving high, with training and employment remittance channels, compiling better programmes to facilitate their statistics, offering assistance through labour integration into the urban economy attachés and foreign embassies, smoothing the re-entry process, and other interventions. • Eliminate the gaps in social and The Law on Sending Workers Abroad and public services offered to migrants Employing Foreign Workers, adopted in • Strengthen support for and 2001 with a revised draft under review in management of employment abroad 2007, outlines the conditions under which and protection for migrant workers Mongolian workers may seek employment abroad and employers may hire foreigners • Facilitate the reintegration of in Mongolia. This includes licensing, fees migrant workers putting to use skills and management of recruitment agencies; and experience obtained abroad coordination with Government agencies and non-government organizations in Mongolia; agreements between employers abroad and Mongolian workers and between Mongolian 4.6 Children at work employers and foreign workers; employment Child labour in is a continuing concern of foreign experts, and so forth. There is in Mongolia. Many children are being denied a recognized need to continue increasing a childhood and a future by dropping out of awareness, conducting surveys and building school or working long hours for low wages capacity for policy makers, Government under conditions that damage physical health offi cials and recruitment agencies. and mental development.

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Defi nitions for child labour are still Box 11 being considered globally. The subject Economic activity, child labour and will be discussed at the 18th Session of hazardous work the International Conference of Labour Economically active children supply labour Statisticians in 2008. Two measures used in for the production of economic goods and Mongolia for participation of children in work services as defi ned by the United Nations are the labour force participation rate and the System of National Accounts (SNA) during child work rate. The former measures both the a specifi ed time-reference period. According to the SNA, production of economic goods unemployed and employed as a percentage of and services includes: (i) all production and the population in the same age group, while processing of primary products whether for the latter is the employment-to-population the market, for barter or for own consumption; ratio or the employed as a percentage of the (ii) the production of all other goods and total in a particular age group. The labour services for the market; and (iii) in the case of households which produce such goods and force participation rate was 10.8 percent for services for the market, the corresponding children aged 15-17, according to the 2002- production for own consumption. The 2003 Labour Force Survey. Figure 4.5 shows economically active population includes the that the percentage of children aged 15-19 in employed and unemployed. The concept the labour force was considerably higher than “usually active” is based on activity status during a long period such as twelve months. for younger children aged 5-9 and 10-14. “Current activity” is based on a brief period such as seven days. Those working for one Figure 4.6 Percentage of children in the labour hour during the reference week are counted as force, Mongolia, 2002−2003 currently employed. Child labour is a narrower concept than “economically active children,” excluding all those aged 12 years and older who are working only a few hours a week in permitted light work and those aged 15 years and older whose work is not classifi ed as “hazardous”. The concept of “child labour” is based on the ILO Minimum Age Convention, 1973 (No. 138), which represents the most comprehensive and authoritative international defi nition of minimum age for admission to employment Source: NSO of Mongolia and ADB. 2004. Main Report of the Labour Force Survey 2002-2003: Survey Report or work, implying “economic activity.” of all Four Survey Rounds Conducted During October Hazardous work by children is any activity 2002-September 2003, Ulaanbaatar. Table 73. or occupation that, by its nature or type, has or leads to adverse effects on the child’s The overall “child work rate” (CWR) safety, health (physical or mental) and moral in Mongolia was 10.1 percent by currently development. Hazards could also derive from employed – as distinguished from the share excessive workload, physical conditions of of the labour force, which includes those who work, and/or work intensity in terms of the duration or hours of work even where the are unemployed. The CWR is higher for activity or occupation is known to be non- boys than girls at all age groups. By using hazardous or “safe”. The list of such types of the only criterion available to the survey for work is determined at the national level after determining the extent of “child labour,” tripartite consultation. which is on the basis of hours of work, the Sources: Resolution concerning statistics of the survey data showed that 59.1 percent of the economically active population, employment, economically active children, or 5.7 percent unemployment and underemployment, adopted by the Thirteenth International Conference of Labour of all children aged 5-17, could be termed as Statisticians in October 1982, and ILO, The end of in the category of child labour. However, it child labour: Within reach, Report of the Director- should be noted that this estimation did not General, Global report under the follow-up to the ILO Declaration on Fundamental Principles and include children in the worst forms of child Rights at Work, ILO, Geneva, 2006. labour, since the household survey is not able

MHDR 2007 Chapter 4 99 SPECIAL GROUPS IN THE LABOUR FORCE to capture fully the extent of the children 30 percent were working in the households of staying in institutions or street children. close relatives and extended families. Among the remaining 70 percent, 42 percent were Data from the HIES/LSMS survey offer working for distant relatives, with 28 percent additional information about the proportion employed by non-relatives. Almost two-thirds of working children and non-attendance for of the children working in other households 1998 and 2002. These sources indicate that are boys. In most cases, children working in the proportion of working children aged 10- other households are engaged in both herding 14 declined from 9.3 percent in 1998 to 2.8 and agricultural work, such as minding the percent in 2002. This is lower than percentages herd in pasture or at night, watering, shearing, from the Labour Force Survey, which showed cleaning barns, preparing milk products and 7.3 percent of children aged 10–14 at work searching for lost animals, and in domestic during 2002–2003, with the corresponding work, such as fetching water, collecting dung, fi gure for rural areas at 14.7 percent. For the washing clothes and cleaning dishes, cooking, poorest quintile of households, the proportion minding siblings and guarding homes when declined from 5.3 percent to 4.7 percent over the owners are away. The average number of the same period, while the corresponding working hours was found to be 9.4 per day. Of fi gures for the poorest two quintiles dropped the children aged 7-15, 47 percent were not from 10.9 percent to 4.6 percent. attending school. Only 1 in 4 is compensated by cash payment. Despite progress, children from poor households remain more likely to drop out of The Population Teaching and Research school than children from rich households. Centre of the National University of Mongolia In addition, the Participatory Poverty conducted a survey of children engaged in Assessment pointed out that boys and girls gold mining during July and August 2004, from poor families are sometimes temporarily in Bornuur Soum and Zaamar Soum of Tuv absent from school so that they can help their Aimag. Hard-rock mining involves digging families. This also makes it more diffi cult holes, crushing rock and carrying loads. to obtain the education and skills needed Children working in placer mining are involved later in life. While efforts are now made on in digging, washing and carrying. Some of the the part of offi cials in aimags and soums to work is underground. Other children stand in raise awareness about the pitfalls of child water under harsh weather conditions. The labour, some families continue to rely on their survey showed that the average age of the support to earn a living. Especially harmful children was 15 years. Most were boys; three- are those jobs detrimental to physical growth fourths attended school. One-third worked in and mental health, such as working in gold gold mining throughout the year. Another one- mines and carrying heavy loads. half did so mainly during summer vacations, with the remaining engaged only occasionally. The majority of the working children, or One-third of the children covered by the 55.2 percent, are engaged in economic activity survey said they had worked without a day off in order to contribute to household income. during the seven days preceding the survey. The next important reason for working is The survey indicated that 1 in 8 children had “gaining work experience and skills,” which been in an accident resulting from collapse of was provided by 22 percent of working a tunnel or falling into a pit. children. Another issue that has emerged in Many children continue to drop out of recent years is the use of child jockeys in rural schools to help with livestock herding. horse racing for business promotion rather A special survey has revealed that, of the than traditional entertainment. Injuries and children herding animals and doing domestic fatalities have prompted public debate about work in other households in rural areas, about the extent to which children are participating

100 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE in the nomadic way of life. Horse racing can as household income, number of children, promote discipline and endurance as well as number of siblings, family educational life skills for livestock herders. However, background, income and occupation, and there are concerns about exploitation of marital status, are the strongest determinants children in events that are becoming more of educational attainment and school commercial and organized by horse trading dropouts. The educational system needs to associations and wealthy horse owners. One equalize educational opportunities, across estimate for the participation of child jockeys incomes, geographical locations and gender. is 30,000 each year in about 500 races. For these objectives to be met, it is necessary to consider not only direct costs, but also the Some opportunities for children to help indirect and opportunity costs of education for with family herding and household businesses poor families. give them a chance to learn the “work ethic” now found to be in demand by employers In addition to fi nding ways to open new in Mongolia. The main concern about child opportunities for productive employment labour is to make sure that girls and boys do with adequate earnings for communities and not drop out of education and training in order families, targeted measures exist to address to perform these tasks. It is also important that the problem of child labour. In this regard, the their physical health and psychological well- Government has been taking steps to adopt being are not impaired by the worst forms of and implement policies and programmes child labour. designed to achieve the goal of eliminating child labour. Although mainstreaming the The School-to-Work Transition Survey issue of child labour into overall national and points to an important issue for Mongolia, sectoral policy agendas is ongoing, signifi cant which is the number of young people not progress has already been made. attending school. This consequence of child labour and poverty requires special attention The Government is working toward for its long-term implications. Poor households fulfi lling the goal of Education for All by in rural areas are faced with a tradeoff adopting national programmes to increase between short-term gains and long-term access to and the quality of education, losses. In the short term, they need the help establishing a non-formal education (NFE) of their children in family-run businesses, or structure and providing NFE education to in providing basic support to other dependent school dropout children. The high dropout children and the elderly in the household. In rate that occurred during the initial years of the long term, however, children dropping out economic transition has been halted. However, of school have low- productivity jobs for the providing quality and accessible education rest of their lives, perpetuating the poverty to all children, by addressing the differences trap for generations. Income support schemes between urban and rural areas and between for children from poor families who drop out boys and girls, remains a critical challenge. of school should be strengthened. For young girls, the provision of kindergartens for their The National Programme for the younger siblings or social assistance for the Development and Protection of Children elderly would also help. However, it is also (2002-2010), which provides the overall necessary to build schools in rural areas and framework of actions to protect the rights and to drastically reduce the costs of education for development of children, has set the goal of dropout students, including school fees, in- reducing the number in the worst forms of kind payments to schools, transportation and child labour by 95 percent. The Government housing costs. instituted a Child Benefi t Programme in 2005, which gives all children up to age 18 a The School-to-Work Transition Survey monthly benefi t. notes that poverty and related measures, such

MHDR 2007 Chapter 4 101 SPECIAL GROUPS IN THE LABOUR FORCE

The recently adopted National Plan of the worst forms of child labour. Action on Combating Sexual Exploitation and Traffi cking of Children aims at The ILO’s global report on child labour ensuring multi-faceted and coordinated has suggested that the critical threshold in actions to prevent traffi cking, to eliminate child labour elimination occurs somewhere sexual exploitation of children, and to between the 10−20 percent child work rehabilitate child victims. Amendments participation rate. In this case, enforcement to the Employment Promotion Law of compulsory education is also much easier have provided opportunities for school to achieve. Mongolia, having a child work dropout youth to benefi t from employment participation rate of 10.1 percent, is therefore promotion services, including short-term likely to succeed in effectively abolishing skills training. The Government is working child labour if the appropriate economic, toward extending the duration of skills employment and social policies are in place. training courses and introducing subsidies Elimination of child labour requires actions for trainees from vulnerable sections of the on different fronts. population, from the Employment Promotion Fund. The National Plan of Action for Decent Mongolia has ratifi ed the ILO Work (2005-2008) aims to implement Conventions No.138 concerning Minimum fundamental rights and principles at work, Age and No. 182 concerning the Worst Forms and includes promoting youth employment, of Child Labour. The provisions in the Labour extending social insurance and occupational Law of the country are more or less in line with safety activities, and developing social these ILO Conventions by setting different age partnerships. standards for admission to work on the basis on the nature of work and posing limitations National employers’ and workers’ on working hours. However, legislation alone organizations have been active players in the is not suffi cient to address the complexities of national commitment and advocacy against child labour. It is important to take social and child labour. The Confederation of Mongolian economic measures to address the issues of Trade Unions (CMTU) and the Mongolian overall adult and youth employment, poverty Employers’ Federation (MONEF) have and inequality. The national legislation adopted strategies to combat the worst forms also needs further review to fi ll gaps and to of child labour in Mongolia and are working respond to the emerging new issues and the on a number of fronts, from sensitization of capacity for law enforcement needs further members to capacity building in strategic strengthening. areas and other concrete actions. In June 2005, the Government, CMTU and MONEF Making substantial progress to achieve signed a tripartite Call for Collaborative the goals of Education for All and the MDG Action to eliminate child labour in mining goal on education is crucial for eliminating and by 2015 and have developed an action plan to preventing child labour. Improving the quality achieve this objective. of education, increasing access to education in areas where supply is seriously affected due Despite these initiatives, many challenges to migration, and clarifying strategies to reach remain, including strengthening capacities in the most vulnerable children who are staying data gathering. In addition, a need exists to away from education are needed. Efforts to broaden the network of interest groups; further ensure that all children are provided with develop and harmonize the policies and legal basic education should be complemented with framework; ensure the application of laws and or supported by targeted and effective welfare regulations; improve the methods of awareness policies. raising; reach and mobilize Mongolia’s widely dispersed population; and replicate effective In addition to agriculture, children direct actions for eliminating and preventing predominantly work in the informal economy,

102 MHDR 2007 Chapter 4 SPECIAL GROUPS IN THE LABOUR FORCE where they take up jobs requiring low or no skills and often under hazardous conditions, Recommendation 14 with no social protection. Child labour tends to exacerbate the problem of youth employment Eliminate child labour insofar as it prevents children from acquiring • Support the Education for All the needed education and skills to compete on agenda by adopting programmes to the labour market as young adults. Training increase access to and the quality of policy will need to be more responsive to education the specifi c vulnerabilities of child labourers as well as to adress the overall challenge of • Build and maintain schools in equipping young people entering the labour rural areas and reduce the costs market. of education, including school expenses, in-kind payments The importance of strengthening locally to schools, transportation and tuned actions to address child labour – dormitory costs, to reduce the including raising awareness of communities, number of dropouts and risk of child targeted interventions to withdraw, rehabilitate labour and reintegrate child labourers and enforcing • Establish a clear legal regulatory relevant legislation – must be emphasized. framework for the informal mining Progress is being made in this direction. sector, to allow enforcement of However, the elimination of child labour child labour legislation. In June requires sustained local actions backed up 2005, the Government, CMTU and with effective policies at the national level. MONEF signed a tripartite Call for Finally, as in other efforts in promoting Collaborative Action to eliminate decent work and employment generation, it has child labour in mining by 2015 and proved useful to work with both employers’ have developed an action plan to organizations and workers’ organizations to achieve this objective eliminate child labour. • Continue mainstreaming the issue of child labour in national and sectoral Conclusion policy agendas and raise awareness at all levels, by implementing the Chapter 4 has focused on the specifi c National Advocacy Strategy for labour market conditions and obstacles Elimination of the Worst Forms of facing Mongolian youth, women, people with Child Labour 2007-2011 disabilities and migrants, and has also looked • Conduct focused assessments at the issue of child labour. The importance of progress in implementing of these issues arises in part from their effect, existing legislation, including the individually and cumulatively, on the overall identifi cation of problems and productivity of the economy, which will moves to strengthen implementation inevitably be diminished if large groups of capacity the population are unable to fi nd decent work • Maintain the approach of promoting that allows them to contribute to their full sustained actions at the local level, potential. But more importantly from a human backed up with effective policies at development perspective, allowing these the national level groups to share in the benefi ts of a growing and dynamic economy, and allowing them to lead full and rewarding lives with the same choices and opportunities that other Mongolians have access to, is one of the country’s most fundamental human development challenges.

MHDR 2007 Chapter 4 103

CHAPTER 5 Recapping key recommendations and conclusion RECAPPING KEY RECOMMENDATIONS AND CONCLUSION

Recapping key recommenda- better jobs, including enough decent tions and conclusion work in areas where poor people are located, and to build the capacity among An employment-based poverty reduction Mongolian men and women to fi ll these agenda in Mongolia today can be built around openings as they are created the recommendations presented in this report. • Ensure that macroeconomic policies and In this chapter the key recommendations are sectoral policies promote employment- recapped. intensive growth

Recommendation 1 Recommendation 2

Develop a national employment Expand investment in human strategy as a core component of the development MDG-based National Development Strategy A continued expansion of Government investment in human development for all the The powerful and direct link between Mongolian people, including expenditures poverty reduction and employment generation on education, training, health care and other was acknowledged at the September basic public services, is a prerequisite for any 2005 World Summit, when world leaders development strategy for the country. For the committed themselves to achieving additional employment-based strategy outlined in this targets for the Millennium Development report, investment in human development is Goals. Among them was to “achieve full and even more vital, as the ability of all women productive employment and decent work for and men, especially the poor, to take advantage all, including women and young people.” The of new employment opportunities depends on new employment target is included under their education, skills and health. Goal 1: Eradicate extreme poverty and hunger. It explicitly recognizes the central place of Investment in human development decent work in poverty reduction. A national requires more than just more spending in social decent work strategy, building on existing sectors; it requires targeting of that spending policies and on international best practices, that benefi ts poor people and social groups can be one of Mongolia’s highest priorities that are excluded, vulnerable or otherwise at this time, to spread the benefi ts of growth need support to integrate into the productive more equitably and to allow all Mongolian labour force. Some priorities for investment in women and men to realize in their lives the human development include the need to: vision of the Mongolian Constitution, which • Reduce the urban-rural gap in core recognizes the right of each citizen to decent public services such as education, health, work. Such a strategy should be incorporated sanitation and water into Mongolia’s MDG-based National • Reduce the public service gap within urban Development Strategy, as a goal in itself areas between ger population and other and as a means to achieve the MDG poverty residents reduction target. • Increase the targeting of expenditures • Make full and productive employment for education, training and public and decent work for all, including employment services and health care women and young people, an important on poor populations being left behind, goal of the National Development especially rural areas and ger districts Strategy, as well as a means to achieve poverty reduction • Reduce or eliminate fees charged to poor people for core public services, such as • Develop a national employment health care and education strategy that aims to create more and

106 MHDR 2007 Chapter 5 RECAPPING KEY RECOMMENDATIONS AND CONCLUSION

• Continue to increase Government spending • Create a national council on vocational on human capital including support for training, skills standards and certifi cation, vocational education and training involving key stakeholders who will work together to support the development of a Recommendation 3 legal framework, fi nancing mechanisms, methodological centres, vocational Bridge the skills mismatch between standards, pedagogical issues, certifi cation supply and demand in the labour procedures, teacher training, school market management and training facilities among others. Creating new job openings in sectors with higher productivity and higher wages • Establish professional qualifi cation and earnings will not have the desired impact standards under the oversight of this on living standards unless more Mongolian council that will be of use to Mongolian women and men have the skills that employers’ workers seeking employment at home and demand. At present both employers and abroad. workers are fi nding a mismatch between the skills gained through education and training Recommendation 4 and those demanded in the labour market. Reduce alcoholism Overcoming this problem will require a strong collective effort by Government educational Alcoholism is a serious health, social institutions and training providers as well as and economic problem in Mongolia today and by employers and worker organizations. The poses direct challenges to the Government’s following are suggestions for how this effort employment-based poverty reduction agenda, could proceed: by making it much more diffi cult to integrate • Strengthen links between the supply of all Mongolians of working age including education and training and demand for the poor people into the labour market. A skills in labour markets, through greater recent WHO-funded epidemiological study of participation by employers and unions alcohol consumption in Mongolia found that in reviewing training courses, setting 33.9 percent of male respondents, and 11.5 occupational standards, offering on- percent of female, advised that at least once in the-job training, and developing bridge the previous year “drinking or being hung over programmes between school and work interfered with [their] work at school, or a job, such as through apprenticeships and or at home”. An agenda to combat alcoholism internships. should include the following steps: • Launch a multi-stakeholder effort to • Launch a national campaign to reduce reform vocational education and training alcoholism, educating people about its to overcome the current mismatch negative social and economic impact on between the skills provided by training Mongolian people institutions and the qualifi cations sought • Regulate access to alcohol by competitive enterprises. Involve employers, trade unions, Government • Launch a workplace-based educational and schools in this effort. campaign about the dangers of alcohol abuse suggesting ways to help workers • Launch a campaign to change attitudes who suffer from alcoholism, involving toward vocational education and training employers’ organizations, trade unions and by promoting the value of practical- the Government oriented, hands-on approaches to developing skills required in the labour market.

MHDR 2007 Chapter 5 107 RECAPPING KEY RECOMMENDATIONS AND CONCLUSION

Recommendation 5 by a relatively small segment of the labour market. Improve labour market information In view of this situation, and bearing in The Mongolian National Statistical mind the “resource curse” that affects many Offi ce is one of the strongest in the region, resource-rich developing countries, which and their professionalism and cooperation are unable to generate strong sustainable have been deeply appreciated by the authors. growth, Mongolia could greatly enhance The following suggestions are offered to take its future economic prospects by making employment and poverty data another step diversifi cation of sources of production and forward, in order to allow effective monitoring employment a high national priority. of trends and implementation of policy. • Use revenues from the mining sector to • Conduct labour force assessments on build a more diversifi ed economy, through a quarterly or annual basis, following investment in human capital, physical international standards, to give policy infrastructure and entrepreneurship makers and other stakeholders up-to-date development, in order to reduce dependence information on employment trends on export of natural resources and to open • Gather and report gender-disaggregated employment opportunities to greater employment data numbers of women and men not currently in decent and productive work • Establish a programme of regular and ad hoc establishment-based surveys and • Identify new ways to diversify production censuses in areas that enable poor households to obtain employment and earnings • Compile, analyze and disseminate practical information for employment promotion, • Monitor closely competitiveness of fi rms such as for training providers, business in non-mining sectors of Mongolia, development, livestock herders and job including the impact of exchange rate counselling, mediation and placement trends • Create and maintain an investment- Recommendation 6 friendly tax policy and a taxpayer-friendly administration by reducing red tape and Diversify sources of economic growth streamlining the audit process, in order and employment generation to promote transparency, growth and employment in Mongolian business The mining sector has been the leading source of Mongolia’s accelerated economic Recommendation 7 growth since 2004, primarily because of the surge in global market prices for Diversify production and promote Mongolia’s key mineral products, including employment linked to mining copper, gold and coal. Because mining is a capital-intensive industry, and since much As noted above, the mining sector of the growth in recent years has been due has been the main engine of growth for the to higher prices and not to greater output, Mongolian economy in the last four years, the quantity of new jobs created by this and is expected to continue to play that role growth spurt has been relatively low, with for some time to come. However the formal the main explanation for the decline since mining sector, which produces 99 percent of 2004 in employment elasticity of growth. total sector output, is highly capital-intensive This is also an underlying reason for and does not directly generate enough growing income inequality in the country, employment to make mining a source of pro- as the benefi ts of growth in the form of poor growth. The informal mining sector is high-paying employment are being enjoyed generating income for a larger number of rural

108 MHDR 2007 Chapter 5 RECAPPING KEY RECOMMENDATIONS AND CONCLUSION poor, but also poses health, environmental a programme should include the following and social challenges, including child labour. measures: Government policies are needed to increase • Promote decentralization by giving soum the employment elasticity of mining sector governors and citizens’ khurals greater growth-through building more robust linkages infl uence in charting and implementing from mining to processing, infrastructure local development initiatives, including and other sectors and through supportive the authority to command more fi scal but effective regulation of informal mining resources. activities. Such an agenda should include the following steps: • Expand public employment services – training, counselling, mediation, • Build and deepen links between mining information and other services – in soum and other upstream and downstream centres, allocating a larger share of the sectors, by promoting the development Employment Promotion Fund for use at the of mineral processing and encouraging soum level and ensuring implementation the domestic sourcing of energy and other through programmes launched to utilize inputs including from small enterprises these funds. • Actively promote training and skills • Expand investment in physical development for employment in the infrastructure and promote local economic mining sector, to ensure that Mongolian development in areas identifi ed through women and men have the skills required participatory processes, using labour- to fi ll high-paying current and future intensive approaches where appropriate. employment openings in this sector • Pilot small business development services • Improve legal coordination and formalize and agricultural extension services in informal mining. soum centres that support herders as entrepreneurs. Recommendation 8 • Promote public-private partnerships to Rural employment generation expand employment and community – reinvigorating the soum centre services economy Recommendation 9 There are many indications of a signifi cant increase in economic activities Rolling back informality in rural areas, including a rapid growth in banking activity, an increase in the number The informal economy has played an of herding households with electricity and important role over the transition period by owning vehicles, and the presence of a absorbing redundant workers, cyclically rapidly growing number of herders with unemployed, new entrants, internal migrants large enough herds to make their herding and additional workers. The large numbers a commercial activity. At the same time, of people currently engaged in the informal rural poverty, at 37 percent as of 2006, is economy are therefore a diverse group: signifi cantly higher than urban, and poverty highly-educated women and men unable to rates among herders with fewer livestock fi nd employment suitable for their skills, are particularly high. The best way to offer unskilled workers unqualifi ed for formal these poor households a route out of poverty sector employment, new entrepreneurs, and is through reinvigorating the soum centres internal migrants. All face problems due to as commercial and economic centres, in their informal status, most importantly, the which poor herders will have access to lack of access to social protection and other support for their herding activities and to Government services. Government efforts new non-herding sources of income. Such should:

MHDR 2007 Chapter 5 109 RECAPPING KEY RECOMMENDATIONS AND CONCLUSION

• Continue to implement the state policy • Broaden use of the Employment and action plan on informal employment Promotion Fund to support activities in through integrated approaches and rural areas and urban centres including tripartite support vocational training, entrepreneurship training and business incubators to • Continue and expand efforts to improve productivity and earnings in the “formalize” informal employment by informal economy. extending Government services and economic support to informal workers Recommendation 10 and ensuring that they are covered by the labour law and social protection Promote decent and productive work for young people • Accelerate registration of informal- economy workers under the national plan Mongolian youth are fi nding it diffi cult in order to improve: access to Government to fi nd decent work. Youth unemployment services, participation in consultations on rates of 14 percent are far higher than the policies and programmes, membership in national average, and even for those who employers’ and workers organizations and fi nd employment, it takes too long to fi nd awareness about labour rights decent work that provides opportunities • Launch a campaign to raise awareness for productive and successful lives. The among workers in the informal economy School-to-Work Transition Survey fi ndings about job contracts and labour rights and include recommendations for the following engage them in discussions about policies policy measures to increase the employment and programmes that affect them prospects of young people: • Support business development of informal • Introduce policy measures to increase the economy operators through steps such employment prospects of young people as improving access to credit, training based on target groups identifi ed by the and business incubator services, and by SWTS including them in Government and donor programmes • Incorporate youth employment in the National Employment Strategy as part of • Create and support new associations the MDG-based National Development including employers’ organizations, Strategy, including policies for sub-sectors trade unions and cooperatives, that in agriculture, industry and services protect groups of informal economy workers including informal miners, • Introduce entrepreneurship programmes drivers and owners of microbuses and for young people involved in self- taxis, photographers, street vendors, employment, including the least educated market sellers and others group • Reduce employers’ social insurance • Provide targeted assistance to young contributions to an appropriate level, women in the labour market, who face while ensuring that Social Insurance Fund considerable disadvantages, despite their fi nances are not weakened and future higher educational attainment. benefi ts not jeopardized • Develop opportunities for education, • Improve workplace safety in the informal training and employment – such as through economy through participatory public works schemes – for young people, assessments, labour inspection, greater with special measures to assist those out of involvement by the social partners in the labour market for long periods, such as safety campaigns and pilot testing of rural youth innovative approaches to occupational • Support efforts by employers’ safety and health organizations and trade unions to identify

110 MHDR 2007 Chapter 5 RECAPPING KEY RECOMMENDATIONS AND CONCLUSION

and deliver appropriate kinds of on-the- Survey found that, while on average female job training encouraging employers to wages are not lower than male wages, this offer training and employment to young masks what appears to be discriminatory people, including dropouts and graduates, behaviour against women, since they possess by offering economic incentives characteristics that would otherwise lead to higher productivity than men. Statistical • Encourage young people to reassess analysis shows that the wages of women their aspirations and expectations in line would be, on average, 22 percent higher than with improved information about career men if wages refl ected all of their personal prospects in the labour characteristics, including age, education, • Support vocational training and re-training training and experience. Although women for young people in growth sectors such are key actors in the informal economy, as manufacturing, construction and energy they face disadvantages and obstacles such through the Employment Promotion Fund as inadequate credit, family obligations and • Encourage youth entrepreneurship severe over-qualifi cation for their work. through business training, microcredit, Gender inequities in the Mongolian national campaigns, business information, labour market and society also impose diffi cult improvements in the business environ- burdens on men. Pressures on boys to drop out ment, youth networks, and support for the of school and start earning income are much informal economy higher than on girls, leading to lower skills • Pilot business incubators for young herders and employability. Alcoholism is another to help them set up their own businesses example of a gender inequity; the incidence with entrepreneurship training and business of serious alcohol problems among the male development services population is much higher than the female. • Strengthen coordination and planning for • Establish requirements that data are youth employment among Government disaggregated by sex and that planning employers, workers, NGOs and others and and evaluation include gender analyses to with international partnerships, such as the identify gaps and inequalities Youth Employment Network • Mainstream the gender perspective into all Recommendation 11 aspects of planning and implementation of policies and programmes that affect the Reduce gender inequalities in the labour market and employment issues labour market • Introduce and enforce measures for equal access, equal opportunity, equal pay For the most part, women and men in for work of equal value and support the Mongolia have been successful in taking promotion of women to decision-making advantage of opportunities for education, roles and senior management training and employment. However, there is a gender wage gap in Mongolia. This • Actively pursue other recommendations refl ects, in part, the fact that women are presented elsewhere regarding reducing under-represented in many of the highest- child labour, school dropout rates and paying sectors, such as mining, construction alcoholism, problems that disproportionately and transportation. Even in sectors where weaken the employability and earnings of both women and men are employed, there Mongolian men remains clear evidence of a gap. Across • Take steps to allow women access to new all sectors, women are less likely to be in jobs emerging in growth sectors with managerial positions in spite of higher levels higher pay such as fi nance, mining and of educational attainment. Statistical analysis public administration by the ILO of the School-to-Work Transition

MHDR 2007 Chapter 5 111 RECAPPING KEY RECOMMENDATIONS AND CONCLUSION

• Enlist the participation and support of Domestic and international migration women’s NGOs in programmes for has emerged as a major survival strategy job creation through public works and for Mongolians confronted with falling community services in both the city and incomes. The population of Ulaanbaatar countryside. has increased by 450,000 since 1990, of which 325,000 represents the net infl ow of • Put into place measures to free women people who have moved to the capital from from their double burden of economic elsewhere in Mongolia. While exact numbers activities and household tasks through of Mongolians who have migrated abroad for shared responsibilities, child care facilities work are not available, they are estimated at and other means. around 100,000. Government policy is needed Recommendation 12 to facilitate the integration of internal migrants into higher-earning employment sectors, and Open opportunities for persons with to manage the international migration process disabilities in the labour market to protect Mongolian migrants. • Eliminate obstacles to registration People with disabilities in Mongolia still by internal migrants, to ensure their face high barriers in accessing the training and unimpeded access to labour markets and employment that would allow them to lead social services productive lives with dignity and make their full contribution to the society and economy. • Target the ger areas of Ulaanbaatar, where Steps that should be taken to address this the proportion of migrants is high, with problem include: training and employment programmes to facilitate their integration into the urban • Mainstream people with disabilities economy into programmes for employment and employability and improve access to • Eliminate the gaps in social and public information and services services offered to migrants • Support the development of associations • Strengthen support for and management of people with disabilities and the NGOs of employment abroad and protection for that serve them, so that they can participate migrant workers in decisions that affect their ability to fi nd • Facilitate the reintegration of migrant decent work workers putting to use skills and experience • Focus particular attention on employment obtained abroad for people with disabilities in rural areas, where access is still very constrained Recommendation 14 • Work collaboratively with employers’ Eliminate child labour associations and trade unions to strengthen and advance services, especially efforts Although the Government of Mongolia to mainstream persons with disabilities is a party to all key international conventions in existing programmes and activities on eliminating child labour, there continues to including measures to ensure equal be a problem in Mongolia. Due to the lack access to skills training for people with of comparable data, it is diffi cult to assess disabilities whether child labour is worsening such as in the area of sexual exploitation of children. Recommendation 13 High school dropout rates refl ect pressures on children to start work at an early age generally Expand employment and ensure in low-productivity jobs as unskilled workers protection for migrant workers for short-term benefi ts thus foregoing the education and training that would lead to better

112 MHDR 2007 Chapter 5 RECAPPING KEY RECOMMENDATIONS AND CONCLUSION jobs later in life. Many help with herding. employment-based poverty reduction agenda In some sectors, such as informal mining, in Mongolia today, as the core component in work by children exposes them to serious the country’s efforts to ensure that the benefi ts health hazards. Some key steps that should of rapid economic growth are shared equitably be taken to make further progress toward the by the whole population. Three key facts that elimination of child labour are: have emerged in the last 10 years in Mongolia are: • Support the education for all agenda by adopting programmes to increase access to a. Economic growth alone is not going to and the quality of education generate good jobs for all Mongolian • Build and maintain schools in rural areas people. Indeed, the strong acceleration and reduce the costs of education, including of growth in the last four years has been school expenses, in-kind payments to accompanied by a slower pace of job schools, transportation and dormitory creation than in preceding years. costs, to reduce the number of dropouts b. Not all jobs are alike. Mongolia needs to and risk of child labour create more good jobs or decent work in • Establish a clear legal regulatory paid employment or self-employment, framework for the informal mining sector, with the potential to provide workers with to allow enforcement of child labour a reliable source of income; with decent legislation. In June 2005, the Government, working conditions; with representation in CMTU and MONEF signed a tripartite decisions about programmes and policies Call for Collaborative Action to eliminate that affect them; and with compensation child labour in mining by 2015 and have that is high enough to allow their families developed an action plan to achieve this a decent standard of living. Too many of objective men and women who report that they are working are either in poverty or live in • Continue mainstreaming the issue of child risk of falling into poverty. The danger of labour in national and sectoral policy a dualistic labour market, with one portion agendas and raise awareness at all levels, in good jobs with adequate compensation, by implementing the National Advocacy while many more are in low-paying, low- Strategy for Elimination of the Worst productivity jobs in the informal economy Forms of Child Labour 2007-2011 or livestock sectors, is very serious. • Conduct focused assessments of progress c. Unless measures are taken to ensure that in implementing existing legislation, Mongolian workers have the education, including the identifi cation of problems skills, experience, aspirations and health and moves to strengthen implementation required for the labour market, they will capacity be unable to take advantage of good • Maintain the approach of promoting employment opportunities. sustained actions at the local level, backed up with effective policies at the national In addition, a well-functioning labour level market should allow all Mongolian people to make their full contribution to the country, and Conclusion to develop to their own full potential. At this time too many women do not enjoy this right, Place broad-based employment creation due to the unequal treatment they face in the at the centre of strategies for growth and work place and in broader society. Others are development impaired by alcoholism. Domestic migrants and persons with disabilities in Mongolia This Mongolian Human Development also face constraints that prevent them from Report has emphasized the need for an making their full contribution to the country’s

MHDR 2007 Chapter 5 113 RECAPPING KEY RECOMMENDATIONS AND CONCLUSION prosperity. A distressingly high number of time, with strong economic growth and very Mongolian children are sacrifi cing their future impressive improvements in the Government’s opportunities by dropping out of school to budget revenues, an urgent need exists to meet immediate needs for family. move ahead with an ambitious National Employment Strategy as a core component International experience demonstrates of the MDG-based National Development that policies matter. Enactment of national Strategy, centred on a package of measures laws, policies and programmes can have a aimed at employment creation and decent considerable and sustained impact on these work for Mongolia’s people, and addressing problems, and lead to more and better work. the specifi c problems of gender inequality, and enhanced human development. At this child labour and barriers faced by people with disabilities to fi nd good jobs. This Mongolia Human Development Report has presented options for doing so, because such goals touch on the very core meaning of the human development concept: giving women and men the opportunity to live full, productive and rewarding lives in accordance with their full potential.

114 MHDR 2007 Chapter 5 BIBLIOGRAPHY

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L.Myagmarjav. 2006. Increasing high Francesco Pastore. June 2007. School-to- productivity employment non-agricultural Work Transition, ILO Working paper, Draft. sectors, Ulaanbaatar, Mongolia. Government of Mongolia. 2007. Dr. S.R. Osmani. 2006. A Background The Millennium Development Goals paper. “Towards an Employment-Oriented Implementation, Second National Report, Pro-Poor Development Strategy for Ulaanbaatar, Mongolia. Mongolia”. Government of Mongolia. Draft N.Sodnomdorj. 2006. Employment and submitted to Parliament in December Labour market in Mongolia, Ulaanbaatar, 2005 and approved in January 2006. The Mongolia. policy of the Government of Mongolia on Informal Employment, Unoffi cial translation, Other References Ulaanbaatar, Mongolia.

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Government of Mongolia, United Ministry of Social Welfare and Labour, Nations Development Programme. 1997. United Nations Population Fund, Mongolian Human Development Report Mongolia 1997, Population and Development Association. Ulaanbaatar, Mongolia. 2005. Status and consequences of Mongolian citizens working abroad: Survey report, Government of Mongolia. 1992. Ulaanbaatar, Mongolia. Constitution of Mongolia, Article 16-4, Ulaanbaatar, Mongolia. Ministry of Health, World Health Organization. 2006. Epidemiological Study on Government Civil Service Council. 2006. Prevalence of Alcohol Consumption, Alcohol Statistical overview on Government employees Drinking Patterns and Alcohol Related Harms structure and movement of Mongolia, Human in Mongolia, Ulaanbaatar, Mongolia. Resource Management Information Database of the offi ce of the Government Service National Statistical Offi ce. 2007. Council, Ulaanbaatar, Mongolia. Mongolian Statistical Yearbook 2006, Ulaanbaatar, Mongolia. International Labour Organization. 2007. School-to-Work Transitions in Mongolia: National Statistical Offi ce. 2006. Executive summary and Main Findings, Mongolian Statistical Yearbook 2005, Employment Policy Papers, Employment Ulaanbaatar, Mongolia. Policy Department, Ulaanbaatar, Mongolia. National Statistical Offi ce. 2004. International Labour Organization. 2006. “Mongolia in a Market System” Statistical Poverty, Employment in Cambodia, Mongolia, Yearbook 1989-2002, Ulaanbaatar, Mongolia. Thailand. National Statistical Offi ce. 2003. International Labour Organization. 2003. Mongolian Statistical Yearbook 2002, Report of the Director-General, Working Out Ulaanbaatar, Mongolia. of Poverty, International Labour Conference, 91st Session 2003, Geneva. National Statistical Offi ce. 2002. Mongolian Statistical Yearbook 2001, Islam. 2006. Fighting poverty: The Ulaanbaatar, Mongolia. Development-Employment Link, Lynne Rienner Publishers Inc., Boulder. National Statistical Offi ce. 2000. Mongolian Statistical Yearbook 1999, John Garnaut, 13 August 2007. “Second Ulaanbaatar, Mongolia. wave of Chinese invasion,” Sydney Morning Herald. National Statistical Offi ce. 1999. Mongolian Statistical Yearbook 1998, Ministry of Social Welfare and Labour. Ulaanbaatar, Mongolia. Updated 2007. The Status of Training and Employment Policies and Practices for People National Statistical Offi ce. 2007. with Disabilities in Mongolia, Draft. Population employment 2006, Ulaanbaatar, Mongolia. Ministry of Social Welfare and Labour, United Nations Development Programme, National Statistical Offi ce. 2007. The School of Economic Studies, Academy Brief Report on Results of the School-to-Work of Management, Swedish International Transition Survey, Ulaanbaatar, Mongolia. Development Agency. 2006. Human Development Text Book, Ulaanbaatar, National Statistical Offi ce, Asian Mongolia. Development Bank, World Bank. 2006.

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Participatory Poverty Assessment Mongolia, T.Navch and others. 2005. Informal Ulaanbaatar, Mongolia. gold mining in Mongolia: A Baseline Survey Report, Covering Bornuur and Zaamar National Statistical Offi ce, Asian Soums, Tuv Aimag, Informal Economy, Development Bank. 2004. Main Report Poverty and Employment, Mongolia Series, of the Labour Force Survey 2002–2003, Number 1, ILO, Bangkok. Survey report of all four survey rounds conducted during October 2002–September Technical Education and Vocational 2003, Ulaanbaatar, Mongolia. Training Proposal for the Millennium Challenge Account, 2007. National Statistical Offi ce, World Bank, United Nations Development Programme. Tajgman, David, Ed. Extending 2004. Main Report of the Household labour protection to the informal economy: Income and Expenditure Survey/Living Bringing together three country experiences, Standards Measurement Survey 2002–2003, “Extension of labour legislation to the Ulaanbaatar, Mongolia. informal economy in Mongolia,” by Damdinjav Narmandakh, ILO Subregional National Statistical Offi ce. 2004. Offi ce for East Asia, (forthcoming). Registration of People with Disabilities. United Nations. February 2006. United National Statistical Offi ce. 2001. 2000 Nations Development Assistance Framework Population and Housing Census: The Main 2007–2011, Ulaanbaatar, Mongolia. Results. Ulaanbaatar, Mongolia.

MHDR 2007 117 ANNEXES

Table A1 Human Development Index and its indicators, by aimag and city, Mongolia, 2006

Combined Adult Life primary, GDP per literacy Life Human Aimags and expectancy secondary and capita* Education GDP HDI rate (15 expectancy development the Capital at birth tertiary gross (PPP index index rank years and index index (HDI) (years) enrolment US$) over) (%) ratio (%) Orkhon 65.8 99.0 83.8 11,740.2 0.680 0.939 0.795 0.805 1 Ulaanbaatar 66.3 99.3 80.4 4,018.0 0.689 0.930 0.616 0.745 2 Omnogovi 66.6 96.8 79.3 3,065.3 0.693 0.910 0.571 0.725 3 Govisumber 67.8 97.7 87.9 1,940.1 0.714 0.944 0.495 0.718 4 Dundgovi 68.2 96.5 72.7 1,958.6 0.720 0.886 0.497 0.701 5 Sukhbaatar 66.7 94.7 77.8 2,205.3 0.695 0.891 0.516 0.701 6 Bulgan 67.4 97.1 76.7 1,648.6 0.707 0.903 0.468 0.692 7 Bayan-Olgii 67.9 97.7 73.2 1,575.1 0.714 0.895 0.460 0.690 8 Selenge 66.7 98.1 83.6 1,384.7 0.696 0.933 0.439 0.689 9 Darkhan-Uul 63.6 98.9 96.9 1,405.4 0.643 0.982 0.441 0.689 10 Khovd 66.6 97.2 80.3 1,483.9 0.694 0.916 0.450 0.686 11 Khentii 65.9 95.9 77.4 1,673.3 0.681 0.897 0.470 0.683 12 Tov 67.6 97.0 69.8 1,489.7 0.710 0.879 0.451 0.680 13 Zavkhan 64.2 96.5 83.4 1,497.6 0.654 0.921 0.452 0.676 14 Arkhangai 65.5 96.2 76.3 1,517.5 0.675 0.896 0.454 0.675 15 Uvs 63.4 96.3 88.1 1,406.2 0.640 0.936 0.441 0.672 16 Dornogovi 65.2 97.3 76.9 1,362.9 0.669 0.905 0.436 0.670 17 Ovorkhangai 65.7 96.4 75.0 1,335.7 0.679 0.893 0.433 0.668 18 Bayankhongor 63.9 96.6 76.1 1,299.8 0.649 0.898 0.428 0.658 19 Govi-Altai 63.9 96.7 78.8 1,203.7 0.649 0.907 0.415 0.657 20 Dornod 61.9 96.3 77.0 1,324.7 0.614 0.899 0.431 0.648 21 Khovsgol 61.6 96.8 73.3 1,307.0 0.610 0.890 0.429 0.643 22 National 65.9 97.8 79.4 2,823.1 0.681 0.917 0.558 0.718 * HDIs calculated using the indicators in the “Global Human Development Report 2006”, 2004. The HDI for 2006 is preliminary calculation. Source: Calculations from NSO for NHDR 2007.

118 MHDR 2007 ANNEXES

Table A2 Human Development Index and its indicators, by aimag and city, Mongolia, 2000-2006

Life Combined primary, Adult literacy GDP per Life Human Aimags and the expectancy secondary and Education rate (15 years capita* (PPP expectancy GDP index development HDI rank Capital at birth tertiary gross index and over) (%) US$) index index (HDI) (years) enrolment ratio (%) Arkhangai 2000 63.03 96.2 64.0 1,408.60 0.634 0.855 0.441 0.643 13 2001 63.21 96.2 64.0 1,108.30 0.637 0.855 0.401 0.631 15 2002 63.36 96.2 58.4 1,093.80 0.639 0.836 0.399 0.625 15 2003 63.48 96.2 69.2 935.80 0.641 0.872 0.373 0.629 16 2004 64.26 96.2 72.4 1,053.30 0.654 0.883 0.393 0.643 17 2005 64.89 96.2 76.7 1,228.10 0.665 0.897 0.419 0.660 16 2006 65.51 96.2 76.3 1,517.50 0.675 0.896 0.454 0.675 15 Bayan-Olgii 2000 66.31 97.7 62.3 928.80 0.689 0.859 0.372 0.640 14 2001 66.49 97.7 62.3 856.30 0.692 0.859 0.358 0.636 11 2002 66.64 97.7 61.6 743.10 0.694 0.857 0.335 0.629 13 2003 66.76 97.7 67.5 850.70 0.696 0.876 0.357 0.643 13 2004 66.90 97.7 71.0 909.00 0.698 0.888 0.368 0.652 14 2005 67.47 97.7 74.4 1,257.50 0.708 0.899 0.423 0.677 10 2006 67.86 97.7 73.2 1,575.10 0.714 0.895 0.460 0.690 8 Bayankhongor 2000 59.88 96.6 61.9 1,246.00 0.581 0.850 0.421 0.617 17 2001 60.06 96.6 61.9 1,672.80 0.584 0.850 0.470 0.635 13 2002 60.21 96.6 60.2 551.30 0.587 0.845 0.285 0.572 22 2003 60.33 96.6 73.4 627.80 0.589 0.889 0.307 0.595 22 2004 61.43 96.6 75.4 812.70 0.607 0.895 0.350 0.617 21 2005 63.26 96.6 77.4 1,074.40 0.638 0.902 0.396 0.645 20 2006 63.91 96.6 76.1 1,299.80 0.649 0.898 0.428 0.658 19 Bulgan 2000 65.77 97.1 73.6 1,574.90 0.680 0.893 0.460 0.678 4 2001 65.95 97.1 73.6 1,264.60 0.683 0.893 0.423 0.666 4 2002 66.10 97.1 60.6 1,319.10 0.685 0.849 0.431 0.655 5 2003 66.22 97.1 78.2 945.70 0.687 0.908 0.375 0.657 9 2004 66.36 97.1 80.6 1,119.60 0.689 0.916 0.403 0.670 7 2005 66.99 97.1 80.0 1,322.00 0.700 0.914 0.431 0.682 8 2006 67.40 97.1 76.7 1,648.60 0.707 0.903 0.468 0.692 7 Govi-Altai 2000 61.54 96.7 69.8 1,229.30 0.609 0.877 0.419 0.635 15 2001 61.72 96.7 69.8 1,139.90 0.612 0.877 0.406 0.632 14 2002 61.87 96.7 59.6 627.40 0.615 0.843 0.307 0.588 20 2003 61.99 96.7 73.8 733.10 0.617 0.891 0.332 0.613 19 2004 62.77 96.7 85.4 978.40 0.630 0.929 0.381 0.646 15 2005 63.34 96.7 89.1 1,069.00 0.639 0.942 0.395 0.659 18 2006 63.94 96.7 78.8 1,203.70 0.649 0.907 0.415 0.657 20 Dornogovi 2000 62.68 97.3 64.5 1,439.90 0.628 0.864 0.445 0.646 10 2001 62.86 97.3 64.5 939.20 0.631 0.864 0.374 0.623 9 2002 63.01 97.3 59.3 1,157.30 0.634 0.846 0.409 0.630 12 2003 63.13 97.3 73.9 999.70 0.636 0.895 0.384 0.638 14 2004 63.91 97.3 76.4 1,144.90 0.649 0.903 0.407 0.653 13 2005 64.54 97.3 80.6 1,171.50 0.659 0.917 0.411 0.662 15 2006 65.16 97.3 76.9 1,362.90 0.669 0.905 0.436 0.670 17 Dornod 2000 58.00 96.3 66.7 922.20 0.550 0.864 0.371 0.595 21 2001 58.98 96.3 66.7 882.20 0.553 0.864 0.363 0.593 20 2002 58.33 96.3 64.2 1,029.90 0.556 0.856 0.389 0.600 18 2003 58.45 96.3 79.9 1,005.70 0.558 0.908 0.385 0.617 18 2004 59.55 96.3 76.7 1,045.10 0.576 0.898 0.392 0.622 20 2005 61.20 96.3 77.0 1,132.60 0.603 0.899 0.405 0.636 21 2006 61.85 96.3 77.0 1,324.70 0.614 0.899 0.431 0.648 21 Dundgovi 2000 66.59 96.5 63.4 -32.70 0.693 0.855 - - 11

MHDR 2007 119 ANNEXES

2001 66.77 96.5 63.4 1,116.70 0.696 0.855 0.403 0.651 9 2002 66.92 96.5 52.5 1,188.50 0.699 0.818 0.413 0.643 7 2003 67.04 96.5 66.9 1,305.20 0.701 0.866 0.429 0.665 5 2004 67.18 96.5 70.9 1,388.90 0.703 0.880 0.439 0.674 5 2005 67.81 96.5 72.9 1,643.10 0.714 0.886 0.467 0.689 6 2006 68.22 96.5 72.7 1,958.60 0.720 0.886 0.497 0.701 5 Zavkhan 2000 61.76 96.5 65.4 987.00 0.613 0.861 0.382 0.619 16 2001 61.94 96.5 65.4 1,207.90 0.616 0.861 0.416 0.631 16 2002 62.09 96.5 66.4 856.80 0.618 0.865 0.359 0.614 16 2003 62.21 96.5 81.6 933.50 0.620 0.915 0.373 0.636 15 2004 62.99 96.5 85.6 888.20 0.633 0.929 0.365 0.642 18 2005 63.62 96.5 85.3 1,242.40 0.644 0.928 0.421 0.664 14 2006 64.24 96.5 83.4 1,497.60 0.654 0.921 0.452 0.676 14 Ovorkhangai 2000 63.24 96.4 56.7 794.40 0.637 0.832 0.346 0.605 19 2001 63.42 96.4 56.7 625.10 0.640 0.832 0.306 0.593 22 2002 63.57 96.4 57.2 626.20 0.643 0.833 0.306 0.594 19 2003 63.69 96.4 69.2 687.80 0.645 0.873 0.322 0.613 20 2004 64.47 96.4 71.4 844.00 0.658 0.881 0.356 0.631 19 2005 65.10 96.4 76.3 1,089.40 0.668 0.897 0.399 0.655 19 2006 65.72 96.4 75.0 1,335.70 0.679 0.893 0.433 0.668 18 Omnogovi 2000 65.03 96.8 66.4 1,444.30 0.667 0.867 0.446 0.660 5 2001 65.21 96.8 66.4 1,385.40 0.670 0.867 0.439 0.659 8 2002 65.36 96.8 60.5 936.30 0.673 0.847 0.373 0.631 11 2003 65.48 96.8 72.1 1,566.40 0.675 0.886 0.459 0.673 4 2004 65.62 96.8 74.0 1,521.50 0.677 0.892 0.454 0.674 4 2005 66.19 96.8 76.3 2,582.30 0.687 0.900 0.543 0.710 4 2006 66.58 96.8 79.3 3,065.30 0.693 0.910 0.571 0.725 3 Sukhbaatar 2000 64.29 94.7 61.5 1,591.50 0.655 0.836 0.462 0.651 7 2001 64.47 94.7 61.5 1,002.70 0.658 0.836 0.385 0.626 17 2002 64.62 94.7 58.5 1,272.60 0.660 0.826 0.425 0.637 8 2003 64.74 94.7 70.7 1,515.00 0.662 0.867 0.454 0.661 7 2004 65.52 94.7 78.9 1,460.10 0.675 0.894 0.447 0.672 6 2005 66.09 94.7 84.3 1,731.00 0.685 0.912 0.476 0.691 5 2006 66.69 94.7 77.8 2,205.30 0.695 0.891 0.516 0.701 6 Selenge 2000 64.36 98.1 72.1 1,013.40 0.654 0.894 0.387 0.645 11 2001 64.44 98.1 72.1 1,093.60 0.657 0.894 0.399 0.650 10 2002 64.59 98.1 69.7 1,247.70 0.660 0.886 0.421 0.656 4 2003 64.71 98.1 89.2 900.30 0.662 0.951 0.367 0.660 8 2004 65.49 98.1 85.6 1,029.80 0.675 0.939 0.389 0.668 8 2005 66.12 98.1 87.9 1,068.60 0.685 0.947 0.395 0.676 11 2006 66.74 98.1 83.6 1,384.70 0.696 0.933 0.439 0.689 10 Tov 2000 65.14 97.0 67.8 1,078.80 0.669 0.873 0.397 0.646 9 2001 65.32 97.0 67.8 1,455.90 0.672 0.873 0.447 0.664 6 2002 65.50 97.0 57.4 931.00 0.675 0.838 0.372 0.628 14 2003 65.59 97.0 72.3 1,080.50 0.677 0.888 0.397 0.654 10 2004 66.37 97.0 72.0 1,103.20 0.690 0.887 0.401 0.659 12 2005 67.00 97.0 72.3 1,263.50 0.700 0.888 0.423 0.670 13 2006 67.62 97.0 69.8 1,489.70 0.710 0.879 0.451 0.680 13 Uvs 2000 60.92 96.3 65.9 832.10 0.599 0.862 0.354 0.605 20 2001 61.10 96.3 65.9 918.80 0.602 0.862 0.370 0.611 19 2002 61.25 96.3 64.9 830.80 0.604 0.858 0.353 0.605 17 2003 61.37 96.3 75.6 981.30 0.606 0.894 0.381 0.627 17 2004 62.15 96.3 82.6 1,101.80 0.619 0.917 0.400 0.646 16 2005 62.78 96.3 87.9 1,191.10 0.630 0.935 0.414 0.659 17 2006 63.40 96.3 88.1 1,406.20 0.640 0.936 0.441 0.672 16 Khovd 2000 64.13 97.2 67.4 1,295.60 0.652 0.873 0.428 0.651 8

120 MHDR 2007 ANNEXES

2001 64.31 97.2 67.4 1,606.90 0.655 0.873 0.463 0.664 7 2002 64.46 97.2 72.0 817.30 0.658 0.888 0.351 0.632 9 2003 64.58 97.2 76.6 898.50 0.660 0.903 0.366 0.643 12 2004 65.36 97.2 79.3 1,072.40 0.673 0.912 0.396 0.660 11 2005 65.99 97.2 79.8 1,317.60 0.683 0.914 0.430 0.676 12 2006 66.61 97.2 80.3 1,483.90 0.694 0.916 0.450 0.686 11 Khovsgol 2000 59.09 96.8 61.4 1,277.90 0.568 0.850 0.425 0.614 18 2001 59.27 96.8 61.4 852.20 0.571 0.850 0.358 0.593 21 2002 59.42 96.8 56.6 823.30 0.574 0.834 0.352 0.587 21 2003 59.54 96.8 66.6 836.40 0.576 0.867 0.354 0.599 21 2004 60.32 96.8 68.9 968.10 0.589 0.875 0.379 0.614 22 2005 60.95 96.8 70.8 1,120.20 0.599 0.881 0.403 0.628 22 2006 61.57 96.8 73.3 1,307.00 0.610 0.890 0.429 0.643 22 Khentii 2000 63.39 95.9 71.6 1,458.90 0.640 0.878 0.447 0.655 6 2001 63.57 95.9 71.6 989.50 0.643 0.878 0.383 0.635 12 2002 63.72 95.9 60.5 1,156.80 0.645 0.841 0.409 0.632 10 2003 63.84 95.9 75.5 1,126.10 0.647 0.891 0.404 0.647 11 2004 64.62 95.9 81.2 1,190.30 0.660 0.910 0.413 0.661 10 2005 65.25 95.9 85.5 1,352.10 0.671 0.924 0.435 0.677 9 2006 65.87 95.9 77.4 1,673.30 0.681 0.897 0.470 0.683 12 Darkhan-Uul 2000 61.20 98.9 89.2 930.80 0.603 0.957 0.372 0.644 12 2001 61.38 98.9 89.2 1,352.10 0.606 0.957 0.435 0.666 5 2002 61.53 98.9 87.6 1,220.50 0.609 0.951 0.418 0.659 3 2003 61.65 98.9 92.1 1,175.90 0.611 0.966 0.411 0.663 6 2004 62.43 98.9 87.8 1,209.90 0.624 0.952 0.416 0.664 9 2005 63.00 98.9 101.1 1,208.30 0.633 0.996 0.416 0.682 7 2006 63.60 98.9 96.9 1,405.40 0.643 0.982 0.441 0.689 9 Ulaanbaatar 2000 64.62 99.3 73.8 2,765.80 0.660 0.908 0.554 0.707 2 2001 64.80 99.3 73.8 2,904.10 0.663 0.908 0.562 0.711 1 2002 64.95 99.3 82.2 2,952.90 0.666 0.936 0.565 0.722 2 2003 65.07 99.3 79.3 3,082.90 0.668 0.926 0.572 0.722 2 2004 65.28 99.3 78.2 3,057.90 0.671 0.923 0.571 0.722 2 2005 65.91 99.3 79.4 3,533.20 0.682 0.927 0.595 0.734 2 2006 66.34 99.3 80.4 4,018.00 0.689 0.930 0.616 0.745 2 Orkhon 2000 63.30 99.0 86.5 5,409.70 0.638 0.948 0.666 0.751 1 2001 63.48 99.0 86.5 2,125.90 0.641 0.948 0.510 0.700 2 2002 63.63 99.0 79.6 3,682.50 0.644 0.925 0.602 0.724 1 2003 63.75 99.0 89.6 5,637.70 0.646 0.959 0.673 0.759 1 2004 64.53 99.0 88.1 9,861.80 0.659 0.954 0.766 0.793 1 2005 65.16 99.0 87.9 10,857.90 0.669 0.953 0.782 0.802 1 2006 65.78 99.0 83.8 11,740.20 0.680 0.939 0.795 0.805 1 Govisumber 2000 66.03 97.7 82.0 1,268.00 0.684 0.925 0.424 0.678 3 2001 66.21 97.7 82.0 1,529.80 0.687 0.925 0.455 0.689 3 2002 66.36 97.7 52.8 1,206.30 0.689 0.827 0.416 0.644 6 2003 66.48 97.7 83.9 1,113.60 0.691 0.931 0.402 0.675 3 2004 66.76 97.7 91.2 1,730.90 0.696 0.955 0.476 0.709 3 2005 67.39 97.7 92.0 1,733.10 0.707 0.958 0.476 0.714 3 2006 67.84 97.7 87.9 1,940.10 0.714 0.944 0.495 0.718 4 National 2000 63.18 97.8 69.6 1,783.00 0.636 0.884 0.481 0.667 2001 63.36 97.8 69.6 1,740.00 0.639 0.884 0.477 0.667 2002 63.51 97.8 69.7 1,710.00 0.642 0.884 0.474 0.667 2003 63.63 97.8 76.9 1,850.00 0.644 0.908 0.487 0.680 2004 64.78 97.8 78.0 2,056.00 0.660 0.912 0.505 0.692 2005 65.21 97.8 80.4 2,407.80 0.670 0.920 0.531 0.707 2006 65.85 97.8 79.4 2,823.10 0.681 0.917 0.558 0.718 * HDI has calculated using the indicators in the “Global Human Development Report 2002-2006”. Source: Calculations from NSO for NHDR 2007.

MHDR 2007 121 ANNEXES

Table A3 Human development index and its indicators, by region, Mongolia, 2000-2006

Combined Adult Life primary, literacy rate GDP per Life Human expectancy secondary and Education Region (15 years capita* expectancy GDP index development at birth tertiary gross index and over) (PPP US$) index index (HDI) (years) enrolment (%) ratio (%) West 2000 62.9 96.9 66.2 1,042.3 0.632 0.867 0.391 0.630 2001 63.1 96.9 66.2 1,142.1 0.635 0.867 0.406 0.636 2002 63.3 96.9 64.9 782.1 0.638 0.862 0.343 0.614 2003 63.4 96.9 74.7 839.0 0.640 0.895 0.355 0.630 2004 64.0 96.9 79.9 963.0 0.651 0.912 0.378 0.647 2005 64.6 96.9 82.5 1,226.4 0.661 0.921 0.418 0.667 2006 65.2 96.9 80.5 1,448.7 0.670 0.914 0.446 0.677 Khangai 2000 62.4 96.9 67.4 1,785.2 0.623 0.871 0.481 0.658 2001 62.6 96.9 67.4 1,198.2 0.626 0.871 0.414 0.637 2002 62.7 96.9 62.1 1,238.9 0.629 0.853 0.420 0.634 2003 62.8 96.9 73.2 1,464.1 0.631 0.890 0.448 0.656 2004 63.6 96.9 75.1 2,295.7 0.643 0.896 0.523 0.687 2005 64.4 96.9 77.4 2,534.2 0.657 0.904 0.540 0.700 2006 65.0 96.9 76.6 3,019.0 0.666 0.901 0.569 0.712 Central 2000 64.4 97.6 72.2 992.5 0.657 0.891 0.383 0.644 2001 64.6 97.6 72.2 1,249.9 0.660 0.891 0.422 0.658 2002 64.8 97.6 62.8 1,123.1 0.663 0.860 0.404 0.642 2003 64.9 97.6 79.6 1,134.2 0.665 0.916 0.405 0.662 2004 65.4 97.6 79.3 1,318.4 0.673 0.915 0.430 0.673 2005 66.0 97.6 83.4 1,392.7 0.683 0.929 0.440 0.684 2006 66.5 97.6 81.0 1,669.9 0.692 0.921 0.470 0.694 East 2000 61.9 95.7 66.6 1,296.9 0.615 0.860 0.428 0.634 2001 62.1 95.7 66.6 953.6 0.618 0.860 0.376 0.618 2002 62.2 95.7 61.1 1,142.1 0.620 0.842 0.406 0.623 2003 62.3 95.7 75.8 1,240.7 0.622 0.891 0.420 0.644 2004 63.2 95.7 78.8 1,283.3 0.637 0.901 0.426 0.655 2005 64.2 95.7 81.8 1,377.9 0.653 0.911 0.438 0.667 2006 64.8 95.7 77.4 1,682.9 0.663 0.896 0.471 0.677 Ulaanbaatar 2000 64.6 99.3 73.8 2,765.8 0.660 0.908 0.554 0.707 2001 64.8 99.3 73.8 2,904.1 0.663 0.908 0.562 0.711 2002 65.0 99.3 82.2 2,952.9 0.666 0.936 0.565 0.722 2003 65.1 99.3 79.3 3,088.8 0.668 0.926 0.573 0.722 2004 65.3 99.3 78.2 3,203.9 0.671 0.923 0.579 0.724 2005 65.9 99.3 79.4 3,533.2 0.682 0.927 0.595 0.734 2006 66.3 99.3 80.4 4,018.0 0.689 0.930 0.616 0.745 National 2000 63.2 97.8 69.6 1,783.0 0.636 0.884 0.481 0.667 2001 63.4 97.8 69.6 1,740.0 0.639 0.884 0.477 0.667 2002 63.5 97.8 69.7 1,710.0 0.642 0.884 0.474 0.667 2003 63.6 97.8 76.9 1,850.0 0.644 0.908 0.487 0.680 2004 64.6 97.8 78.0 2,153.6 0.660 0.912 0.512 0.695 2005 65.2 97.8 80.4 2,407.8 0.670 0.920 0.531 0.707 2006 65.9 97.8 79.4 2,823.1 0.681 0.916 0.558 0.718 Source: Calculations from NSO for NHDR 2007.

122 MHDR 2007 ANNEXES

Table A4 Human Development Index of the countries in transitional economy, 2004

Combined Adult lit- primary, GDP Life ex- Human Countries in eracy rate secondary per Life ex- Educa- pectancy GDP Develop- HDI Transitional (% ages and ter- capita pectancy tion at birth Index ment Index rank Economy 15 and tiary gross (PPP Index Index (years) (HDI) older) enrolment US$) ratio (%) Albania 73.4 98.7 68 4.978 0.82 0.88 0.65 0.748 73 Armenia 71.6 99.4 74 4.101 0.78 0.91 0.62 0.768 80 Azerbaijan 67.0 98.8 68 4.153 0.70 0.89 0.62 0.736 99 Belarus 68.2 99.6 88 6.970 0.72 0.95 0.71 0.794 67 Bosnia 74.3 96.7 67 7.032 0.82 0.87 0.71 0.800 62 Herzegovina Bulgaria 72.4 98.2 81 8.078 0.79 0.92 0.73 0.816 54 Czech Republic 75.7 81 19.408 0.85 0.93 0.88 0.885 30 China 71.9 90.9 70 5.896 0.78 0.84 0.68 0.768 81 Estonia 71.6 99.8 92 14.555 0.78 0.97 0.83 0.858 40 Georgia 70.6 100.0 75 2.844 0.76 0.91 0.56 0.743 97 Hungary 73.0 87 16.814 0.80 0.95 0.86 0.869 35 Kasakhstan 63.4 99.5 91 7.440 0.64 0.96 0.72 0.774 79 Kyrgyzstan 67.1 98.7 78 1.935 0.70 0.92 0.49 0.705 110 Lao People’s 55.1 68.7 61 1.954 0.50 0.66 0.50 0.553 133 Dem.Rep. Latvia 71.8 99.7 90 11.653 0.78 0.96 0.79 0.845 45 Macedonia 73.9 96.1 70 6.610 0.82 0.87 0.70 0.796 66 Moldavia 68.1 98.4 70 1.729 0.72 0.89 0.48 0.694 114 Mongolia 64.5 97.8 77 2.056 0.66 0.91 0.50 0.691 116 Poland 74.6 86 12.974 0.83 0.95 0.81 0.862 37 Romania 71.5 97.3 75 8.480 0.78 0.90 0.74 0.805 60 Russian 65.2 99.4 88 9.902 0.67 0.95 0.77 0.797 65 Slovakia 74.3 100.0 77 14.623 0.82 0.92 0.83 0.856 42 Slovenia 76.6 95 20.939 0.86 0.98 0.89 0.910 27 Tajikistan 63.7 99.5 71 1.202 0.65 0.90 0.41 0.652 122 Turkmenistan 62.5 98.8 4.584 0.63 0.91 0.64 0.724 105 Ukraine 66.1 99.4 85 6.394 0.69 0.94 0.69 0.774 77 Uzbekistan 66.6 74 1.869 0.69 0.91 0.49 0.696 113 Viet Nam 70.8 90.3 63 2.745 0.76 0.81 0.55 0.709 109 Source: Global Human Development Report 2006.

MHDR 2007 123 ANNEXES rank GDI GDI index uted income Equally distrib- index attainment Equally distrib- uted educational tancy index uted life expec- Equally distrib- GDP per capita (PPP US$) per capita (PPP GDP (%) Combined pri- enrolment ratio mary, secondary, secondary, mary, and tertiary gross over) (%) Adult literacy rate (15 years and birth (years) male female male female male female male female Life expectancy at Gender Development Index and its indicators, by aimag and city, Mongolia, 2006 Development Index and its indicators, by aimag city, Gender

Calculations from NSO for NHDR 2007. Capital Aimags and the Table A5 Table ArkhangaiBayan-OlgiiBayankhongorBulgan 63.32Govi-Altai 65.60 60.91Dornogovi 68.10 69.97Dornod 65.35 96.6Dundgovi 98.2 97.0 60.83 64.56Zavkhan 95.9 60.97 97.1Ovorkhangai 96.3 66.99 70.12 70.7Omnogovi 70.5 69.79 70.0 97.5 97.2 58.34 65.52Sukhbaatar 97.3 82.0Selenge 76.0 63.43 65.67 96.0 97.0 62.14 82.5 72.16 Tov 1,534.6 97.3 96.3 74.8 72.9 1,719.8 68.18 96.6 63.20 66.49 1,316.7 Uvs 1,500.8 73.8 1,433.2 62.27 96.8 1,283.3 Khovd 97.0 96.2 69.58 96.4 82.6 80.4Khovsgol 71.59 71.6 97.0 79.8 62.93 96.0 67.4 96.0 1,296.5 1,644.4 Khentii 0.678 95.4 0.713 0.635 68.6 1,483.2 Darkhan-Uul 1,652.7 1,115.8 71.43 80.2 96.5 82.5 64.98 77.9 1,249.2 Ulaanbaatar 93.9 98.2 74.0 60.26 1,500.0 63.55 81.6Orkhon 59.23 86.6 70.86 1,973.7 72.0 0.896 1,158.0 0.649 0.706Govisumber 0.895 59.76 98.1 66.85 1,943.9 1,304.4 69.97 0.898 97.2 64.10 1,637.0 84.8 63.51 0.672National 80.4 1,366.3 97.0 61.62 83.8 67.84 1,365.4 97.6 97.3 Source: 3,420.5 68.93 96.8 99.1 0.454 0.617 2,401.7 69.45 2,724.5 0.731 95.6 0.459 66.65 86.7 96.1 96.8 66.2 0.907 0.903 96.4 0.428 65.02 0.676 2,007.9 99.4 0.680 0.689 81.3 0.905 0.655 98.8 0.654 76.3 71.57 1,499.2 69.6 62.59 74.37 95.8 73.5 15 1,273.6 92.8 99.2 0.690 97.8 99.2 0.899 20 9 74.3 95.1 69.38 84.1 0.885 0.414 0.468 0.697 76.9 1,501.6 77.4 101.0 0.435 98.0 0.657 0.692 0.893 97.6 1,539.0 1,477.8 0.921 1,542.9 98.8 1,484.6 80.5 0.671 0.702 1,275.6 1,745.5 82.1 1,427.4 83.3 1,135.7 82.0 19 0.910 97.5 0.429 7 1,599.0 0.497 1,092.7 0.890 17 4,169.6 0.648 75.5 0.715 1,744.4 0.704 0.433 93.8 0.451 85.5 3,876.3 0.642 0.696 0.668 0.611 0.933 0.676 21 2,352.9 0.570 83.2 13,098.4 0.647 5 1,533.7 0.515 0.723 0.687 18 10,520.9 14 0.879 3,045.6 0.676 0.701 0.936 0.438 0.915 2,611.4 0.890 3 0.983 0.735 0.691 6 0.745 0.898 0.451 0.930 0.683 0.440 0.682 8 0.450 0.426 0.673 0.433 0.687 0.944 0.642 0.939 13 0.470 0.688 0.616 16 11 0.685 22 0.916 0.741 10 0.489 12 0.794 0.723 2 0.826 0.557 0.719 4 1

124 MHDR 2007 ANNEXES

Table A6 Gender Development Index, by aimag and city, Mongolia, 2003-2006

Gender development index Aimags and the Capital city 2003 2004 2005 2006 Arkhangai 0.627 0.644 0.661 0.676 Bayan-Olgii 0.643 0.650 0.673 0.689 Bayankhongor 0.593 0.617 0.641 0.654 Bulgan 0.655 0.669 0.681 0.692 Govi-Altai 0.612 0.646 0.658 0.657 Dornogovi 0.638 0.654 0.663 0.671 Dornod 0.616 0.621 0.636 0.648 Dundgovi 0.663 0.667 0.682 0.704 Zavkhan 0.635 0.642 0.664 0.676 Ovorkhangai 0.612 0.631 0.655 0.668 Omnogovi 0.672 0.673 0.708 0.723 Sukhbaatar 0.660 0.672 0.691 0.701 Selenge 0.661 0.669 0.677 0.691 Tov 0.653 0.660 0.672 0.682 Uvs 0.626 0.646 0.659 0.673 Khovd 0.643 0.661 0.676 0.687 Khovsgol 0.598 0.614 0.628 0.642 Khentii 0.648 0.663 0.678 0.685 Darkhan-Uul 0.662 0.664 0.681 0.688 Ulaanbaatar 0.716 0.717 0.730 0.741 Orkhon 0.785 0.820 0.828 0.826 Govisumber 0.679 0.714 0.718 0.723 National 0.679 0.693 0.707 0.719 Source: Calculations from NSO for NHDR 2007.

Table A7 Gender Development Index and its indicators, by region, Mongolia, 2006

Combined pri- Equally Equally Equal- Adult literacy mary, secondary, Life expectancy GDP per capita distrib- distribut- ly rate (15 years and tertiary gross uted life ed educa- distrib- GDI Region at birth (years) (PPP US$) GDI and over) (%) enrolment ratio expec- tional at- uted rank (%) tancy tainment income male female male female male female male female index index index West 62.47 68.05 97.5 96.3 76.4 84.5 1,550.3 1,350.7 0.671 0.914 0.445 0.677 5 Khangai 62.74 68.37 97.3 96.6 71.9 81.2 3,230.1 2,815.9 0.676 0.901 0.568 0.715 2 Central 63.43 70.46 97.7 97.5 77.0 85.0 1,937.3 1,413.2 0.699 0.921 0.466 0.695 3 East 61.37 68.73 96.0 95.4 72.6 82.1 1,829.0 1,541.4 0.667 0.896 0.470 0.678 4 Ulaanbaatar 61.62 69.45 99.4 99.2 77.4 83.3 4,169.6 3,876.3 0.676 0.930 0.616 0.741 1 National 62.59 69.38 98.0 97.5 75.5 83.2 3,045.6 2,611.4 0.683 0.916 0.557 0.719 Source: Calculations from NSO for NHDR 2007.

MHDR 2007 125 ANNEXES

Table A8 Gender Development Index, by region, Mongolia, 2003-2006

Gender development index Region 2003 2004 2005 2006

West 0.632 0.648 0.666 0.677

Khangai 0.660 0.689 0.704 0.715

Central 0.662 0.668 0.683 0.695

East 0.642 0.652 0.668 0.678

Ulaanbaatar 0.716 0.717 0.730 0.741

National 0.679 0.693 0.707 0.719

Source: Calculations from NSO for NHDR 2007.

Table A9 Gender Empowerment Measure, and its indicators by aimag and city, Mongolia, 2006

Indexed EDEP for Indexed EDEP for Indexed EDEP for Aimags and the Capital city GEM parliamentary representation economic participation income

Arkhangai 0.000 0.981 0.035 0.339 Bayan-Olgii 0.000 0.915 0.037 0.317 Bayankhongor 0.000 0.979 0.030 0.336 Bulgan 0.000 0.968 0.039 0.336 Govi-Altai 0.000 0.929 0.027 0.319 Dornogovi 0.000 0.904 0.032 0.312 Dornod 0.000 0.974 0.030 0.335 Dundgovi 0.000 0.914 0.046 0.320 Zavkhan 0.880 0.843 0.035 0.586 Ovorkhangai 0.000 0.890 0.031 0.307 Omnogovi 0.000 0.886 0.073 0.320 Sukhbaatar 0.000 0.904 0.053 0.319 Selenge 0.000 0.981 0.032 0.338 Tov 0.000 0.882 0.035 0.306 Uvs 0.000 0.890 0.032 0.307 Khovd 0.000 0.962 0.034 0.332 Khovsgol 0.000 0.935 0.030 0.322 Khentii 0.882 0.940 0.039 0.620 Darkhan-Uul 0.000 0.908 0.031 0.313 Ulaanbaatar 0.498 0.971 0.098 0.522 Orkhon 0.000 0.979 0.288 0.422 Govisumber 0.000 0.961 0.044 0.335 National 0.242 0.957 0.068 0.422 Source: Calculations from NSO for NHDR 2007.

126 MHDR 2007 ANNEXES

Table A10 Gender Empowerment Measure, by aimag and city, Mongolia, 2003-2006

Gender empowerment measure Aimags and the Capital city 2003 2004 2005 2006 Arkhangai 0.316 0.315 0.326 0.339 Bayan-Olgii 0.304 0.310 0.315 0.317 Bayankhongor 0.311 0.320 0.321 0.336 Bulgan 0.283 0.316 0.314 0.336 Govi-Altai 0.323 0.295 0.314 0.319 Dornogovi 0.298 0.318 0.307 0.312 Dornod 0.605 0.326 0.316 0.335 Dundgovi 0.293 0.302 0.307 0.320 Zavkhan 0.605 0.592 0.578 0.586 Ovorkhangai 0.318 0.322 0.320 0.307 Omnogovi 0.632 0.319 0.327 0.320 Sukhbaatar 0.321 0.314 0.315 0.319 Selenge 0.304 0.324 0.326 0.338 Tov 0.305 0.304 0.311 0.306 Uvs 0.275 0.289 0.274 0.307 Khovd 0.322 0.321 0.320 0.332 Khovsgol 0.324 0.322 0.304 0.322 Khentii 0.608 0.605 0.596 0.620 Darkhan-Uul 0.319 0.317 0.314 0.313 Ulaanbaatar 0.562 0.522 0.521 0.522 Orkhon 0.365 0.389 0.407 0.422 Govisumber 0.334 0.332 0.318 0.335 National 0.468 0.415 0.414 0.422 Source: Calculations from NSO for NHDR 2007.

Table A11 Gender Empowerment Measure, by region, Mongolia, 2003-2006 Gender emwpowerment measure Region 2003 2004 2005 2006 West 0.480 0.404 0.401 0.405 Khangai 0.325 0.329 0.334 0.345 Central 0.392 0.321 0.319 0.327 East 0.566 0.461 0.455 0.473 Ulaanbaatar 0.562 0.522 0.521 0.522 National 0.468 0.415 0.414 0.422 Source: Calculations from NSO for NHDR 2007.

MHDR 2007 127 ANNEXES

Table A12 Mongolia: Millennium Development Goals (MDG) Baseline Observed Target Goals/Targets/Indicators 1990 2000 2005 2006 2015 Goal 1 Reduce Poverty and Hunger Target 1 Poverty headcount 36.30(95) 35.60(98) 36.10(02) 32.20 18.00 Target 2 Prevalence of Underweight children 12.00(92) 12.70 6.30 0 Develop and implement strategies aimed at creating favorable and productive workplace for Target 3 youth. Create jobs through increased opportunity to utilize land, simplifi ed rules for small and medium businesses, greater access to credit for employed citizens. Reduce negative impact of migration and urbanization, protect right of migrants, create legal protection, Target 4 develop systems for provision of jobs, housing, education, culture and other social services Goal 2 Achieve Universal Primary Education Target 5 Provide primary education to all girls and boys by 2015 Net enrollment ratio in primary education 95.90(97) 95.00 93.30 91.40 100.00 Proportion of pupils starting grade 1 who reach grade 5 91.00 83.60 101.20 86.80 100.00 Literacy rate of youth aged 15-24 99.00 97.70 100.00 Goal 3 Promote Gender Equality and Empower Women Eliminate gender disparity in primary and secondary education by 2015 and to all levels of Target 6 education no later than 2015 Ratio of girls to boys in primary education 1.03(95) 1.01 0.98 0.98 1.00 Ratio of girls to boys in secondary education 1.33(97) 1.20 1.11 1.03 1.00 Ratio of female to male students in higher education institutions 1.72 1.53 1.53 1.00 Proportion of women in population engaged in wage 51.10 50.40 53.10 53.90 50.00 employment in non-agriculture sectors Percentage of women elected to national parliament 24.90 11.80 6.60(04) 30.00 Percentage of women candidates in parliamentary election 7.70(92) 10.90 13.70(04) 35.00(12) Goal 4 Reduce Child Mortality Target 7 Reduce by two thirds, between 1990 and 2015, the under-fi ve mortality rate Under-fi ve mortality rate (per 1000 live births) 88.80 44.50 26.00 23.20 29.20 Infant mortality rate (per 1000 live births) 64.40 32.80 20.70 19.10 22.00 Percentage of children covered by immunization against measles 82.3(91) 92.40 97.50 98.90 96.00 Goal 5 Improve Maternal Health Provide access to individuals of appropriate age to required reproductive health services and Target 8 reduce by three-quarters, between 1990 and 2015, the maternal mortality rate Maternal mortality rate (per 100,000 live births) 121.60 166.30 92.70 67.20 50.00 Percentage of births deliveries attended by skilled health personnel 100.00 99.60 99.60 99.70 99.80 Goal 6 Combat STIS/HIV/AIDS, and TB Have halted by 2015 and begun to reverse the spread of Human Immunodefi ciency Virus Target 9 (HIV) and Acquired Immune Defi ciency Syndrome (AIDS). Target 10 Reverse the spread of TB by 2015 Incidence of TB (per 100,000 population ) 79.00 124.80 177.40 185.30 100.00 Death rates associated with tuberculosis (per 100,000 population) 4.80 3.20 3.40 2.90 0.00 Percentage of TB cases diagnosed and treated with international standard diagnostic and 31.40(94) 80.90 79.00 82.10 100.00 treatment methods Target 11 Implement special program to combat dental diseases Goal 7 Ensure Environmental Sustainability Integrate the principles of sustainable development into country policies and programmes, Target 12 eliminate air pollution in urban areas, especially in Ulaanbaatar Percentage of land area covered by forest 7.80 8.50 7.80 7.70 9.00 Percentage of protected land area 3.60 13.10 13.30 13.30 15.00 Carbon-dioxide emissions (tons/person) 11.52 6.57 5.75(02) 4.00 Target 13 Reduce drop in water levels through protection of sources or rivers and streams Target 14 Halve, by 2015, the proportion of people without sustainable access to safe drinking water Proportion of population with access to safe drinking water 55.00 66.20 70.00 Target 15 By 2015, to have achieved signifi cant improvement in the lives of slum dwellers Proportion of population living conditions compliant with health safety standard 22.60 23.00 50.00 Goal 8 Development a Global Partnership for Development Create conducive environment for achieving the MDGs through development of improved Target 16 trading and fi nancial systems Address special needs of Mongolia as a landlocked country through negotiation for favorable Target 17 terms for access to the sea, improve the effi ciency of transit transportation through the territories of foreign countries, and increase transit transportation through the territory of Mongolia Develop a debt strategy to ensure sustainability of foreign and domestic long-term debt, study Target 18 methods and instruments of debt management applied and internationally, manage the debt without adverse impacts on the budget and economy of Mongolia Target 19 Introduce new information and communication technologies, built “informed society” Goal 9 Guarantee Human Rights and Develop Democratic Governance Fully respect and uphold the Universal Declaration on Human Rights and ensure freedom of Target 20 media and access to information Target 21 Foster and put into practice basic principles and practices of democracy Target 22 Create and put into practice zero tolerance to corruption in all spheres of social life Source: Government of Mongolia. 2007. The Millennium Development Goals Implementation, Second National Report.

128 MHDR 2007 ANNEXES

Sketch map A1.1 Number of primary and secondary schools, by aimag centers, Mongolia, 2006

Source: NSO. Mongolian Statistical Yearbook 2006

Sketch map A1.2 Number of primary and secondary schools, by soums, Mongolia, 2006

Source: NSO. Mongolian Statistical Yearbook 2006

MHDR 2007 Overview 129 ANNEXES

Sketch map A2 Infant mortality rate (per 1.000 live births), by aimag and city, Mongolia, 2006

Source: NSO. Mongolian Statistical Yearbook 2006

Sketch map A3 Maternal mortality rate (per 1.000 live births), by aimag and city, Mongolia, 2006

Source: NSO. Mongolian Statistical Yearbook 2006

130 MHDR 2007 ANNEXES

Table A13 Population profi le, Mongolia, 1989-2006

Indicators 1989 1990 1995 2000 2001 2002 2003 2004 2005 2006 Resident population as of the 2,099.1 2,153.4 2,243.0 2,407.5 2,442.5 2,475.4 2,504.0 2,533.1 2,562.4 2,594.8 end of year, thous.persons Male population, % 49.9 49.9 49.7 49.5 49.5 49.6 49.6 49.6 49.6 48.8 Female population, % 50.1 50.1 50.3 50.5 50.5 50.4 50.4 50.4 50.4 51.2 Annual population growth 2.7 2.6 1.6 1.4 1.5 1.3 1.2 1.2 1.2 1.3 rate, % Urban population, % 57.2 54.6 51.6 57.2 57.2 57.4 58.5 59.1 60.2 60.9 Urban population annual 3.1 -2.1 0.1 -1.0 1.5 1.7 3.0 2.3 3.0 2.3 growth, % Population 65 years age and 4.1 4.1 3.8 3.5 3.5 3.5 3.5 3.5 3.5 4.2 older, % Dependency rate, % 84.8 83.7 71.9 59.5 56.9 56.6 56.6 56.6 56.6 48.6 Infant mortality rate (per 1000 64.1 64.4 44.4 32.8 29.5 29.6 23.0 22.3 20.7 19.1 live births) Economically active population, - - 839.8 847.6 872.6 901.7 959.8 986.1 1,001.2 1,042.8 thous.persons Employed population, thous. - - 794.7 809.0 832.3 870.8 926.5 950.5 968.3 1,009.9 persons Number of registered - - 45.1 38.6 40.3 30.9 33.3 35.6 32.9 32.9 unemployed, thous.persons Men - - 21.5 17.9 18.4 14.1 15.2 16.0 14.6 14.1 Women - - 23.6 20.7 21.9 16.8 18.1 19.6 18.3 18.8 Unemployment rate, % - - 5.5 4.6 4.6 3.4 3.5 3.6 3.3 3.2 Source: Government of Mongolia, UNDP. Mongolian Human Development Report 2003; NSO. Mongolian Statistical Yearbook 2006.

Table A14 Urban and rural population, by aimag and city, Mongolia, 2006 Resident population (Thousand persons) Residence Urban Rural Total Urban 1,139.7 21.5 1,161.2 Ulaanbaatar 994.3 - 994.3 Darkhan-Uul 71.8 15.7 87.5 Orkhon 73.5 5.9 79.4 Rural 439.8 993.8 1,433.6 Arkhangai 18.5 74.8 93.3 Bayan-Olgii 30.4 69.7 100.1 Bayankhongor 24.7 59.1 83.8 Bulgan 15.3 45.0 60.3 Govi-Altai 19.2 41.1 60.3 Dornogovi 31.2 23.3 54.5 Dornod 39.5 34.1 73.6 Dundgovi 13.8 35.4 49.2 Zavkhan 16.4 64.2 80.6 Ovorkhangai 24.4 90.5 114.9 Omnogovi 14.1 32.4 46.5 Sukhbaatar 12.2 43.4 55.6 Selenge 33.2 66.9 100.1 Tov 16.6 69.8 86.4 Uvs 23.0 57.5 80.5 Khovd 30.6 57.9 88.5 Khovsgol 38.6 83.5 122.1 Khentii 30.5 40.5 71.0 Govisumber 7.5 4.8 12.3 Total 1,580.2 1,014.6 2594.8 Source: NSO. Mongolian Statistical Yearbook 2006.

MHDR 2007 131 ANNEXES

Table A15 Main economic indicators, Mongolia, 2000-2006

Indicators 2000 2001 2002 2003 2004 2005 2006

GDP ( at 2000 prices, billion Togrogs) 1013.5 1026.2 1069.1 1134.5 1256.8 1346.1 1459.0

GDP ( at current prices, billion Togrogs) 1018.9 1115.6 1236.9 1479.7 1945.6 2524.3 3172.4 GDP, by sector, % Agriculture 29.3 25.0 20.5 20.6 21.7 20.8 18.8 Industry 22.2 22.2 22.8 25.4 29.6 35.0 40.3 Services 48.6 52.8 56.7 54.0 48.7 44.2 40.9 GDP growth rate, % 1.1 1.3 4.2 6.1 10.8 7.1 8.4 Composition of GDP, by expenditure approach, % Final consumption, 76.8 79.2 84.1 76.7 71.4 65.1 60.4 Gross fi xed capital formation 37.5 36.7 34.5 40.4 39.5 38.9 35.4 Gross investments 30.5 29.7 29.5 32.6 30.2 29.6 26.6 Net export -14.3 15.9 -18.6 -17.1 -10.9 -4.0 4.2 Budget revenue, billion Togrogs 351.1 439.3 477.0 553.9 713.1 837.9 1360.4 Budget expenditure, billion Togrogs 429.7 489.7 548.6 615.8 752.5 764.6 1237.0 Overall budget defi cit, billion Togrogs -78.6 -50.4 -71.6 -61.9 -39.4 73.3 123.4 Government revenue as of % of GDP 34.5 39.4 38.6 37.4 36.7 33.2 42.9 Government expenditure as % of GDP 42.2 43.9 44.4 41.6 38.7 30.3 39.0 Overall budget defi cit, as % of GDP -7.7 -4.5 -5.8 -4.2 -2.0 2.9 3.9 Trade balance, million USD $ -78.7 -116.2 -166.8 -185.1 -151.4 -119.4 57.2 Broad money (M2),billion Togrogs, end of the year 258.8 331.1 470.1 703.3 847.0 1170.1 1536.5 Total loan outstanding, million Togrogs 66,757 135,071 231,450 442,148 606,799 859,852 1,223,287 Growth of total loan outstanding, % 102.3 71.4 91.0 37.2 41.7 42.3 Total loans issued outstanding from outside of Ulaanbaatar 1,825 15,666 38,039 69,754 107,815 177,959 274,394 Share of non-Ulaanbaatar loans in total 2.7 11.6 16.4 15.8 17.8 20.7 22.4 Consumer price index, % 8.1 8.0 1.6 4.7 11.0 9.5 6.0 Exports (US$, millions) 535.8 521.5 524.0 615.9 869.7 1064.9 1542.8 Imports (US$, millions) 614.5 637.7 690.8 801.0 1021.1 1184.3 1485.6 Source: NSO, Mongolian Statistical Yearbook, 2000-2002, 2006

132 MHDR 2007 ANNEXES

Table A16 Employees by sectors, at the end of the year, thousand persons, Mongolia, 1997-2006

Sector 1998 1999 2000 2001 2002 2003 2004 2005 2006 Agriculture, hunting and forestry 394.2 402.6 393.5 402.4 391.4 387.5 381.8 386.2 391.4 Mining, quarrying 18.6 19.0 18.6 19.9 23.8 31.9 33.5 39.8 41.9 Manufacturing 57.1 58.5 54.6 55.6 55.6 54.9 57.3 45.6 47.0 Electricity, gas and water supply 22.2 21.3 17.8 17.8 19.8 22.7 23.4 28.5 30.0 Construction 27.5 27.6 23.4 20.4 25.5 35.1 39.2 48.9 56.3 Wholesale, retail trade, repair of motor veh., motorcycle., personal, household 74.5 83.1 83.9 90.3 104.5 129.7 133.7 141.9 160.6 goods Hotels, restaurants 15.3 16.1 13.3 16.5 20.9 23.3 28.4 29.5 31.0 Transport, storage, communication 33.4 34.9 34.1 35.1 38.8 39.5 42.2 42.4 41.2 Financial Intermediation 7.4 7.7 6.8 7.3 9.4 12.6 15.9 16.1 16.8 Real state, renting, business activities 5.1 5.0 7.2 6.8 10.9 9.3 11.2 9.0 12.0 Public administration, defence, 30.9 31.5 34.7 41.0 43.9 44.8 46.2 46.7 46.9 compulsory social security Education 42.5 43.2 54.4 55.2 59.3 55.3 57.8 58.8 62.0 Health, Social security 35.6 34.8 33.5 33.0 34.5 36.8 39.4 39.5 39.3 Community, social, personal services 25.1 25.2 29 26.9 27.5 37.0 34.5 26.7 22.9 Others 3.2 3.1 4.2 4.1 5.0 6.1 6.0 8.7 10.6 Total 792.6 813.6 809.0 832.3 870.8 926.5 950.5 968.3 1009.9 Source: NSO. Mongolian Statistical Yearbook 1989-2002, 2002, 2006.

Table A17 Employees, by aimag and city, thousand persons, Mongolia, 1997-2006

Aimag and city 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Arkhangai 37.3 37.3 38.1 38.6 39.2 39.6 38.7 37.9 38.5 40.0 Bayan-Olgii 23.4 29.2 30.9 29.1 30.8 32.4 32.9 32.7 32.0 32.6 Bayankhongor 34.1 35.1 34.2 34.6 35.6 31.6 34.4 36.1 36.6 37.8 Bulgan 21.3 22.7 22.7 22.7 22.4 23.4 23.1 21.2 22.3 23.0 Govi-Altai 29.5 30.4 30.0 28.5 28.8 28.8 29.3 29.3 29.8 30.2 Dornogovi 16.8 16.1 17.2 17.4 18.8 19.6 19.6 19.7 19.5 19.5 Dornod 18.2 15.5 17.0 16.7 17.1 18.1 19.0 19.1 19.7 20.8 Dundgovi 21.7 22.0 22.1 21.8 22.5 22.7 23.0 22.6 22.6 22.5 Zavkhan 43.5 42.0 41.7 37.4 36.6 36.7 38.0 34.6 35.8 36.2 Ovorkhangai 46.0 47.2 49.5 49.7 47.2 45.5 46.1 45.6 45.8 47.6 Omnogovi 16.8 18.9 20.0 20.1 21.8 20.5 20.5 20.6 21.7 21.2 Sukhbaatar 20.5 21.3 21.7 22.4 23.1 23.7 24.4 24.5 24.2 24.6 Selenge 26.2 28.8 31.8 30.7 32.6 35.0 36.4 35.0 34.9 37.4 Tov 33.7 35.4 35.9 37.6 40.4 41.8 42.5 41.2 42.7 43.6 Uvs 33.5 34.5 31.3 32.7 33.2 32.7 32.8 32.6 32.4 32.5 Khovd 31.4 32.5 32.8 32.4 32.6 34.0 33.8 34.3 35.1 36.1 Khovsgol 42.4 44.0 46.6 46.3 47.6 49.4 50.3 50.5 50.9 52.6 Khentii 22.7 22.6 22.9 23.6 24.8 25.1 27.1 25.5 25.9 26.7 Darkhan-Uul 25.3 25.3 27.2 20.6 23.8 23.1 28.4 27.4 26.4 27.9 Ulaanbaatar 192.0 201.7 209.8 215.5 221.9 254.2 290.2 322.7 333.7 359.4 Orkhon 17.2 26.7 26.7 27.0 28.1 28.8 32.1 33.4 33.5 33.9 Govisumber 2.6 3.4 3.5 3.6 3.6 4.0 4.0 3.9 4.2 3.8 Total 765.1 792.6 813.6 809.0 832.3 870.8 926.5 950.5 968.3 1009.9

Source: NSO. Mongolian Statistical Yearbook 2000-2006.

MHDR 2007 133 ANNEXES

Sketch map A4 Employment rate, by aimag and city, Mongolia, 2006

.0

Source: NSO. Mongolian Statistical Yearbook 2006

Sketch map A5 Unemployment rate, by aimags and city, Mongolia, 2006

.0

.0

.0

Source: NSO. Mongolian Statistical Yearbook 2006

134 MHDR 2007 ANNEXES

Table A 18 Working age population, employment and unemployment rates, Mongolia, 1995-2006

1995 2000 2001 2002 2003 2004 2005 2006 Total Population of working age 1186.7 1374.4 1402.8 1439.2 1488.9 1531.1 1577.0 1619.6 Economically active population, 839.8 847.6 872.6 901.7 959.8 986.1 1001.2 1042.8 of which: Employed 794.7 809.0 832.3 870.8 926.5 950.5 968.3 1009.9 Unemployed 45.1 38.6 40.3 30.9 33.3 35.6 32.9 32.9 Labor force participation rate, 70.8 62.9 62.2 62.7 64.5 64.4 63.5 64.4 (%) Employment rate, (%) 67.0 60.0 59.4 60.5 62.2 62.1 61.4 62.4 Unemployment rate, (%) 5.4 4.6 4.6 3.4 3.5 3.6 3.3 3.2 Of which: Female Population of working age 590.4 676.5 719.9 739.1 765.4 790.3 815.3 835.2 Economically active population 384.2 412.8 429.7 447.4 475.8 503.0 507.3 536.8 of which: Employed 360.6 392.1 407.8 430.6 457.7 483.4 489.0 518.1 Unemployed 23.6 20.7 21.9 16.8 18.1 19.6 18.3 18.8 Labor force participation rate, 65.1 61.0 59.7 60.5 62.2 63.6 62.2 64.3 (%) Employment rate, (%) 61.1 58.0 56.8 58.3 59.8 61.2 60.0 62.0 Unemployment rate, (%) 6.1 5.0 5.1 3.8 3.8 3.9 3.6 3.5 Source: NSO. Mongolian Statistical Yearbook 2000-2006.

Table A 19 Number of registered unemployed entered into work, Mongolia, 1995-2006

Aimag and the Capital 1995 2000 2001 2002 2003 2004 2005 2006 Arkhangai 1108 218 411 735 946 711 1089 1124 Bayan-Olgii 667 827 475 968 445 608 1340 1190 Bayankhongor 653 338 556 3116 1538 1018 1276 1408 Bulgan 1800 172 327 476 732 694 609 616 Govi-Altai 246 155 372 691 740 706 912 842 Dornogovi 646 156 285 683 474 630 546 763 Dornod 152 199 414 757 753 769 1012 942 Dundgovi 763 229 154 217 591 657 584 212 Zavkhan 1247 537 1344 1363 1452 1287 1486 1349 Ovorkhangai 2116 681 806 740 971 1037 1205 1537 Omnogovi 306 208 402 372 709 687 841 1094 Sukhbaatar 1809 344 1246 1024 1657 1721 1821 1617 Selenge 638 690 1720 1994 2355 1590 1870 1625 Tov 818 447 500 1262 1472 1578 1416 1030 Uvs 1290 1249 1381 1280 1178 1100 1054 1304 Khovd 249 151 733 976 863 673 1033 1374 Khovsgol 3317 243 1047 1324 1700 1012 1300 2000 Khentii 500 113 597 915 1139 1162 1190 1153 Darkhan-Uul 434 596 263 1198 1193 1431 1516 1580 Ulaanbaatar 9058 6017 10597 12633 14971 17055 17274 17587 Orkhon 281 407 2235 2482 2788 1925 2388 2405 Govisumber 25 46 128 271 172 279 302 314 Total 28123 14023 25993 35477 38839 38330 42064 43066 Source: NSO. Mongolian Statistical Yearbook 2000-2006.

MHDR 2007 Overview 135 ANNEXES

Table A20 Women and economic participation, Mongolia, 1995-2006

1995 2000 2001 2002 2003 2004 2005 2006 Female share of economic activity population 50.7 50.9 50.9 50.5 50.5 50.5 50.5 51.9 (age 15 and above) Female as % of male of economic activity population 97.3 96.4 96.4 97.9 97.9 97.9 97.9 92.7 (age 15 and above) Female share of administrators and managers* - 34.5 34.7 35.8 37.9 39.4 37.2 38.6 * Result of Average wage and salary sample survey. Source: NSO. Mongolian Statistical Yearbook 2000-2006.

136 MHDR 2007 TECHNICAL NOTES

Technical notes (prepared by NSO) The example is based on the 2006 data of Mongolia. The human development index (HDI) 1. Calculating the life expectancy index The HDI is a summary measure of The life expectancy index measures human development. It measures the average the relative achievement of a country in life achievements in a country in three basic expectancy at birth. The life expectancy dimensions of human development: for Mongolia is 65.85 years and the life expectancy index is 0.681. • A long and healthy life, as measured by life expectancy at birth. • Knowledge, as measured by the 2. Calculating the education index adult literacy rate (with two-thirds weight) and the combined primary, The education index measures a country’s relative achievement in both adult secondary and tertiary gross literacy and combined primary, secondary enrolment ratio (with one-third and tertiary gross enrollment. First, an index weight). for adult literacy and one for combined gross • A decent standard of living, as enrolment are calculated. Then these two measured by GDP per capita (PPP indices are combined to create the education US$). index, with two-thirds weight to combined gross enrolment. For Mongolia, adult literacy Before the HDI itself is calculated, an rate is 97.8 and combined gross enrollment index needs to be created for each of these rate is 79.4. Thus adult literacy index is 0.978 dimensions. To calculate these indices – the and combined gross enrolment index is 0.794. life expectancy, education and GDP indices The education index, which is a combination – minimum and maximum values are chosen of these two, has the value 0.917. for each underlying indicator:

• Life expectancy at birth: 25 years and 85 years. • Adult literacy rate (age 15 and above): 0% and 100%. • Combined gross enrolment ratio: 0% and 100%. 3. Calculating the GDP index • GDP per capita (PPP US$): $100 The GDP index is calculated using adjusted and $40,000 (PPP US$). GDP per capita (PPP US$). In the HDI income serves as a surrogate for all the dimensions of For any component of the HDI individual human development not refl ected in along indices can be computed according to the and healthy life and in knowledge. Income is general formula: adjusted because achieving a respectable level of human development does not require unlimited income. Accordingly, the logarithm of income is used. For Mongolia, with a GDP per capita of $2,823.1(PPP US$), the GDP index 0.558. The HDI is then calculated as a simple average of the dimension indices. 4. Calculating the HDI Once the dimension indices have been calculated, determining the HDI is straightforward. It is a simple average of the three dimension indices. The Mongolia HDI is 0.718.

MHDR 2007 137 TECHNICAL NOTES

The gender-related development index (GDI) Calculating the GDI While the HDI measures average achieve- The example is based on the 2006 data of Mongolia. ment, the GDI adjusts the average achieve- 1. Life expectancy index: ment to refl ect the inequalities between men Female Male and women in the following dimensions: Life expectancy: 69.4 62.6 • A long and healthy life, as measured Population share: 0.512 0.488 by life expectancy at birth. • Knowledge, as measured by the adult literacy rate and the combined primary, secondary and tertiary gross enrolment ratio. Calculation of equally distributed life expectancy • A decent standard of living, as mea- index is based on these two indices. sured earned income (PPP US$). The calculation of the GDI involves three 2. Calculating the equally distributed steps. First, female and male indices in each education index dimension are calculated according to this Female Male general formula: Population share: 0.512 0.488 Adult literacy rate: 97.5 98.0 Adult literacy index: 0.975 0.980 Gross enrolment ratio (%): 83.2 75.5 Gross enrolment index: 0.832 0.755 Female and male education indices are calculated Second, the equally distributed index is cal- according to the formula in HDI calculation. culated according to the following formula:

3. Calculating the equally distributed income index measures the aversion of inequality. In Female Male general, higher the value it takes the more is Population share: 0.512 0.488 GDP per capita (PPP US$): 3045.6 aversion of inequality. 2611.4 In GDI calculation =2. Thus equally dis- tributed index for GDI is a harmonic mean of the female and male indices. Fixed minimum and maximum values for GDI calculation: • Female life expectancy at birth: 27.5 years and 87.5 years. 4. Calculating the GDI • Male life expectancy at birth: 22.5 The GDI is a simple average of three equally years and 82.5 years. distributed indices of life expectancy, education and earned income. • Adult literacy rate (age 15 and above): 0% and 100%. • Combined gross enrolment ratio: 0% and 100%. • GDP per capita (PPP US$): $100 and $40,000 (PPP US$). Third, the GDI is a simple average of three equally distributed indices.

138 MHDR 2007 TECHNICAL NOTES

The gender empowerment measure (GEM) Calculating the GEM The calculation is based on the 2006 data for Mongolia Focusing on women’s opportunities rather as whole. than their capabilities, the GEM captures gen- 1. Calculating the EDEP for parliamentary der inequality in three key areas: representation • Political participation and deci- The EDEP for parliamentary representation measures the relative empowerment of women in terms of their sion-making power, as measured political participation. by women’s and men’s percentage Female Male shared of parliamentary seats. Population share: 0.512 0.488 • Economic participation and deci- Parliamentary share (%) 6.6 93.4 sion-making power, as measured by two indicators - women’s and men’s percentage shares of posi- 2. Calculating the EDEP for economic tions as legislators, senior offi cials participation and managers and women’s and The EDEP for economic participation is calculated men’s percentage shares of profes- using women’s and men’s the percentage shares of sional and technical positions. administrative and managerial positions and women’s • Power over economic resources, as and men’s percentage shares of professional and technical positions. measured by women’s and men’s Female Male estimated earned income (PPP Population share: 0.512 0.488 US$). Percentage share of administrative and managerial positions: 39.2 60.8 For each of these three dimensions, Percentage share of professional and technical positions: 59.9 40.1 an equally distributed equivalent percent- age (EDEP) is calculated, as a population – weighted average, according to the following general formula:

measures the aversion to inequality. In the GEM (as the GDI) =2, which places a 3. Calculating the EDEP for income moderate penalty on inequality. The formula Women’s and men’s earned income (PPP US$) is is thus: estimated Female Male EDEP={[female population share (female Population share: 0.512 0.488 index-1)]+[male population share (male index- Estimated earned income (PPP US$): 2611.4 3045.6 1)]}-1

For political and economic participation The female and male indices are then combined to and decision-making, EDEP is then indexed create the equally distributed index: by dividing it by 50. The rationale for this in- dexation: in an ideal society, with equal em- 4. Calculating the GEM powerment of the sexes, the GEM variables One the EDEP has been calculated for the three dimensions would equal 50% - that is women’s share of the GEM, determining the GEM is straightforward. It would equal men’s share for each variable. is a simple average of three EDEP indices.

Finally, the GEM is calculated as a simple average of the three EDEPs.

MHDR 2007 139 TECHNICAL NOTES

Foster, Greer, Thorbecke (FGT) Indices A very general family of poverty measures Calculating the FGT Indices were developed by Foster, Greer and Thor- becke (1984): The headcount, poverty gap and squared poverty gap indices (to be defi ned) later all belong to this family of measures. The FGT measures are defi ned for a ≥ 0, with a as a measure of the sensitivity of the index to poverty. • If α = 0, we have the headcount index

P0. • If α = 1, we have the poverty gap index

P1. • If α = 2, we have the poverty severity

index P2. These measures do not have all the “desir- able” properties, but they are widely used es- pecially the headcount and poverty gap index (because of their intuitive appeal).

Headcount Index Calculating the Headcount Index The Headcount Index (denoted as P0) is the Formally, proportion of the population for whom con- sumption (or some other welfare indicator) is below the poverty line, that is, the share of the population that cannot afford to buy a basic bas- ket of goods • It is ratio of the number of poor people to the total population • It measures the incidence of poverty • It is also called the poverty rate or pov- erty incidence. The headcount index implies that there is a “jump” in welfare, at about the poverty line, In practice, such a jump is not found. The easiest way to reduce the headcount in- dex is to target benefi ts to people just below the poverty line, because these are the ones who are cheapest to move across the line. But such poli- cies are sub-optimal. Thus, despite its popularity, many problems result from an undue concentra- tion on the head-count statistic.

140 MHDR 2007 TECHNICAL NOTES

Poverty Gap Index Calculating the Poverty Gap Index The poverty gap index is the average, over all More specifi cally, defi ne the gap (Gn) as people, of the proportionate gaps between poor the difference between the poverty line (z) people’s living standards and the poverty line (as and the actual consumption (yi) for poor in- a proportion of the poverty line). dividuals; the gap is considered to be zero EXAMPLE: The poverty gap ratio in education for everyone else, then the poverty gap in- could be the number of years of education needed dex P1 is or required to reach a defi ned threshold. In some cases, though, the measure does not make sense or is not quantifi able (for example, when indicators are binary, such as literacy, in which case only the concept of the headcount can be used).

Squared Poverty Gap Index (Severity) Calculating the Squared Poverty Gap Index (Severity) The squared poverty gap index, defi ned as The squared poverty gap index (P2) is the average of the square relative poverty gap of the poor, is a weighted sum of poverty gaps (as a proportion of the poverty line), where the weights are the proportionate poverty gaps themselves. The index is like the poverty gap index, but it has weights given to each observation, putting more weight on those that fall well below the poverty line. A poverty gap of (say) 10% of the poverty line is given a weight of 10% while one of 50% is given a weight of 50%; this is in contrast with the pov- erty gap index, where they are weighted equally.

Calculating the Gini coeffi cient Gini coeffi cient There are formulae for calculating the Gini coeffi cient, and the easiest to manipulate is: The Gini coeffi cient is a measure of statisti- cal dispersion most prominently used as a mea- sure of inequality of income distribution or in- equality of wealth distribution. It is defi ned as a ratio with values between 0 and 1: - the numerator is the area between the Lorenz curve of the distribution and the uniform distribution line; - the denominator is the area under the uni- form distribution line. Thus, a low Gini coeffi cient indicates more equal income or wealth distribution, while a high Gini coeffi cient indicates more unequal distribu- tion. 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corre- sponds to perfect inequality (where one person has all the income, while everyone else has zero Cumulative share of income earned Cumulative share of people from lower income 100% income). The Gini coeffi cient requires that no one have a negative net income or wealth.

MHDR 2007 141 DEFINITIONS OF TERMS

Defi nitions of Terms Employers offer wages or a salary to the workers in exchange for the worker’s Centralized budget. A part of Mongolian labor power, depending upon whether the national budget planned for expenditure by employee is paid by the hour or a set rate per the Government. pay period.

Decentralization. The general term for Employment rate. The employment rate a transfer of authority and/or responsibility is defi ned as the number of people currently for performing a function from the top employed divided by the adult population (or management of an organization or the central by the population of working age). In these governance level of an institution to lower statistics, self-employed people are counted level units or the private sector. as employed.

Economic growth. Economic growth is Employment by sector. Employment in the increase in value of the goods and services industry, agriculture or services as defi ned produced by an economy. It is conventionally according to the International Standard measured as the per cent rate of increase in Industrial Classifi cation (ISIC) system real gross domestic product, or GDP. (revisions 2 and 3). Industry refers to mining and quarrying, manufacturing, construction Education expenditures. Expenditures and public utilities (water and electricity). on the provision, management, inspection Agriculture refers to agriculture, hunting, and subsidiary services of pre-school, forestry and fi shing. Services refer to primary, secondary, all levels of specialized wholesale and retail trade; restaurants and educational insititutions. hotels; transport, storage and communications; fi nance, insurance, real estate and business Education index. One of the three services; and community, social and personal indices on which the Human Development services. Index is built. As a component of the HDI the education index is supposed to describe the Equity. Impartial or just treatment, level of knowledge in a society. For details on requiring that similar cases be treated in how the index is calculated, see technical note. similar ways.

Elasticity. In economics, elasticity is GDP. A sum of value added produced by the ratio of the proportional change in one all domestic and foreign units in the economy variable with respect to proportional change or sum of fi nal products during one year in another variable. period.

Elasticity factor. The extent to which GDP by expenditure approach. an upward shift of the production possibility Describes where and how has distributed the frontier enhances the employment potential income that are produced by all units in the – the latter being defi ned as the scope particular year. for improving the quality and quantity of employment. In other words, we are concerned GDP index. One of the three indices on here with the elasticity of employment potential which the human development index is built. with respect to growth in production potential. It is based on GDP per capita (PPP US$). This index is supposed to measure the standard Employment is a contact between two of living. For details on how the index is parties, one being the employer and the other calculated, see technical note. being the employee. GDP per capita. The amount of GDP Employer. An employer is a person or produced in the particular year divided by the institution that hires employees or workers. average population in the same year.

142 MHDR 2007 DEFINITIONS OF TERMS

Gender. The term gender refers to Governance is a neutral concept comprising the social, economic, political and cultural the complex mechanisms, processes, attributes and opportunities associated with relationships and institutions through which being male and female. In most societies, citizens and groups articulate their interests, men and women differ in the activities they exercise their rights and obligations and undertake, in access and control of resources, mediate their differences. and in participation in decision-making. Government consumption. It includes Gender empowerment measure all current expenditure for purchases of goods (GEM). A composite index measuring gender and services by all levels of government. inequality in three basic dimensions of Capital expenditure on national defense empowerment – economic participation and and security are regarded as consumption decision-making, political participation and expenditure. decision-making and power over economic resources. For details on how the index is Gross domestic investment. Calculated calculated, see technical note. as a sum of additions to the fi xed assets of the economy and net changes in level of Gender relations. Gender relations seek inventories. to shift attention away from looking at women and men as isolated categories to looking at Growth factor. The rate at which the social relationships through which they the production potential of the economy are mutually constituted as unequal social expands, as represented by upward shift of categories. the production possibility frontier.

Gender-related development index Household. A household is a group of (GDI). A composite index measuring average persons (or a single person) who usually live achievement in the three basic dimensions together and have a common arrangement for captured in the human development index-a food, such as using a common kitchen or a long and healthy life, knowledge and a decent common food budget. The persons may be standard of living-adjusted to account for related to each other or may be non-relatives, inequalities between men and women. For including servants or other employees, details on how the index is calculated, see staying with the employer. technical note. Students, boarders and employees Gini index. It is a measure of income residing in and having a common food inequality. It shows the extent to which the arrangement with the household are distribution of income (or consumption) considered members of the household if among individuals or households within they have been in the household for more a country deviates from a perfectly equal than a year or if they have no other place of distribution. A value of 0 represents perfect residence. equality, a value of 100 perfect inequality. However, if there are …(decide on the Good governance. Addresses the number say 5) or more boarders/lodgers in allocation and management of resources a housing unit, they should not be reported to respond to collective problems; it is as members of the household. They are characterized by participation, transparency, considered to be living in a dormitory or accountability, rule of law, effectiveness and boarding house operated by the household. equity. Boarding houses with more than Governance. The exercise of political, (number stipulated in the defi nition say 5) economic and administrative authority in the persons are considered to be institutional management of a country’s affaire at all levels. households. An institutional household

MHDR 2007 143 DEFINITIONS OF TERMS is a group of (number stipulated in the 1-4 employees were treated as employment defi nition say 5) or more unrelated persons that fell within the scope of the defi nition of living together. Other examples are military the informal sector. It was decided to include barracks, prisons, student dormitories, etc. private enterprise, partnerships and self- Institutional households are not covered by employed categories and exclude the other the LFS 2002. sub-divisions in the determination of the coverage of the informal sector. The units Health expenditures. Current and that had no regular employees and those capital spending from Government (central with 1-4 employees were accepted as falling and local) budgets and external borrowings within the informal sector and those that had and grants and social health insurance funds. 5 or more employees were treated as coming Together with private health expenditure, it within the formal sector. makes up total health expenditures. Internal migration. Migration of people Health services access. Percentage of within the state borders of a particular nation. population that has an access to local medical services. This defi nition slightly differs to that Integrability factor. The extent to which used in Global Human Development Reports. the working poor are able to integrate into Because Mongolia has a vast territory, less economic processes so that, when growth population and low population density the occurs and the employment potential expands, access to health services is not appropriate they can take advantage of the greater scope measure in terms of standard hours (for for improving the quality and quantity of instance, in the international practice one employment. hour used as standard time for reaching appropriate local health services on foot or Investment. Savings of enterprises and by local means of transport). individuals, capital investment for expansion and improvement of technical equipment Human development index. A of enterprises, prospecting expenditures, composite index measuring average government stock securities for a term of achievement in three basic dimensions of over 1 year, capital for purchase of shares of human development – a long and healthy life, enterprises and long-term debt to be collected knowledge and decent standard of living. are all included into investment. It is shown by its fi nancial source such as national and Illiteracy rate, adult. The percentage of local budgets, bank loans, foreign direct people aged 15 and above who can not read investment, foreign loans and aid. and write a short, simple statement. Labour markets function through Infant mortality rate. The annual the interaction of workers and employers. number of deaths of infants under one year of Labour economics looks at the suppliers of age per 1000 life births. labour services (workers), the demanders of labour services (employers), and attempts to Infl ation rate. Growth rate of the understand the resulting pattern of wages, consumption price index (CPI). CPI measures employment, and income. an increase of purchasing cost of the fi xed basket. Labour force. It comprises all employed and unemployed registered in the Informal sector. Only employment in Employment Offi ces. non-agricultural economic activities and non- agricultural enterprises, of those who were Labor force participation rate. The self employed, or in private enterprises and proportion of the labor force to population of partnerships that had no paid employees or working age.

144 MHDR 2007 DEFINITIONS OF TERMS

Life expectancy at birth. The number and equal opportunity to place questions on of years a new-born infant would live if the agenda and to express their preferences prevailing patterns of age-specifi c mortality about the fi nal outcome during decision- rates at the time of birth were to stay the same making. It can occur directly or through throughout the child’s life. legitimate representatives.

Literacy rate, adult. The percentage of Percentage of the number of students people aged 15 and above who can read and at all educational level to population at write a short, simple statement. the specifi c age. It is calculated as a ratio of students at the primary, secondary, tertiary Local budget. A part of Mongolian education (net number) to the number of national budget planned for expenditure by population of the particular age. In the case the Aimag, the Capital city, Soum and district of Mongolia according to the Educational Governor. law the particular age depends on the age of entry to the primary school and further Long run. The long-run time frame educational levels. This indicator is estimated assumes no fi xed factor of production. Firms as a ratio of students of specifi c education to can enter or leave the marketplace, and the the population of the particular age. cost (and availability) of land, labor, raw materails, and capital goods can be assumed Population density. The number of to vary. people per a unit of territory.

Maternal mortality rate. The annual Population growth rate, annual. Refers number of death of women from pregnancy- to the average annual exponential growth rate related causes per 100,000 or 10,000 live for the period indicated. births. Primary education. Education at the Occupation. Occupation refers to the fi rst level (according to the International type of work, trade or profession performed Standard Classifi cation of Education –level by the individual during the reference period. 1), the main function of which is to provide If the person is not at work but with a job, primary or basic education. The successful occupation refers to the kind of work that graduates from the 4th grade of secondary the person will be doing when he reports for schools are considered as persons with work. primary education.

Offi cial development assistance Purchasing power parity (PPP). The (ODA). Grants or loans aimed at promotion purchasing power of a country’s currency: of economic development and welfare as the the number of units of that currency required main objectives. The composition of ODA to purchase the same representative basket includes capital, technical and humanitarian of goods and services that a US dollar would assistance. buy in the United State.

Own account worker. A person who Rule of law. Equal protection (of human operates an enterprise or a person who as well as property and other economic rights) operates an enterprise in partnership with and punishment under the law. The rule of law others, without the aid of an employee reigns over government, protecting citizens is considered as an own account worker. against arbitrary state action, and over society However the person may get the assistance of generally, governing relations among private unpaid family workers. interests. It ensures that all citizens are treated equally and are subject to the law rather than Participation. Effective participation to the whims of the powerful. The rule of law occurs when group members have an adequate is an essential precondition for accountability

MHDR 2007 145 DEFINITIONS OF TERMS and predictability in both the public and vocational education. In the case of private sectors. Mongolia it includes the primary colleges education and vocational education. Rural area. Areas and regions which are not included in the concept of “urban” are • 2nd level: Secondary vocational considered rural. educational institutions or 1st level of tertiary educational institutions. Graduates Secondary education. Education at the are considered as persons with higher second level (according to the International education (Bachelor Degree). Standard Classifi cation of Education –level 2), the main objective is to provide specialized • 3rd level: Institutions admit persons with or secondary education (it might be both) Bachelor Degree. Graduates graduated during at least 4 years. It consists of 2 levels: with a Master Degree.

• 1st level: Incomplete secondary Total fertility rate. The average number education. In the case of Mongolia it of children would be born alive by the comprises the students from the 5th to particular woman during her reproductive 8th grades of secondary schools. The period (15-49 years). successful graduates from the 8th grade are considered as persons with incomplete Transparency. Sharing information secondary education. and acting in an open manner. Transparency allows stakeholders to gather information • 2nd level: Complete specialized or that may be critical to uncovering abuses and secondary (or both) education. In the case defending their interests. Transparent system of Mongolia it comprises the students have clear procedures for public decision- from the 9th grade to 10th grade of making and open channels of communication secondary schools or vocational schools. between stakeholders and offi cials, and make The successful graduates from these a wide range of information accessible. institutions considered as persons with complete secondary education or primary Under–fi ve mortality rate. The vocational education. probability of dying between birth and exactly fi ve years of age expressed per 1,000 Short run. The concept of the short-run live births. refers to the decision-making time frame of a fi rm in which at least one factor of production Underemployment. Underemployment is fi xed. Costs which are fi xed in the short- exists when a person’s employment is run have no impact on a fi rms decisions. For inadequate in relation to specifi ed norms or example a fi rm can raise output by increasing alternative employment; account being taken the amount of labour through overtime. of the persons occupational skill training and work experience. Persons visibly Tertiary education. Institutions underemployed comprise all persons in paid such as universities, higher institutes, and or self-employment, whether at work or not colleges (according to the International at work, involuntarily working less than the Standard Classifi cation of Education – level normal duration of work determined for the 3) whichadmit persons who successfully activity, who were seeking or available for completed the secondary schools or primary additional work during the reference period vocational schools.. Tertiary education consists of the following 3 levels: Unemployed. Unemployed persons are persons in the labor force who did not work • 1st level: 10th grade of the secondary or had no job or business during the reference schools or primary vocational schools. week but were reported available and Graduates considered as persons with actively looking for work. Also, considered

146 MHDR 2007 DEFINITIONS OF TERMS as unemployed are persons without job or growing. business who were reported as available for work but were not looking for work because Wages. Wages include remuneration of their belief that no work was available or received as cash wages, tips, commissions, because of temporary illness/disability, bad piece rate earnings, overtime payments, and weather, pending job application or waiting imputed value of benefi ts in kind, such as for job interview. meals or accommodation provided by the employer. Unemployment rate. It is the proportion of the number unemployed persons, registered Work. Work is defi ned as an economic in the Employment Offi ce to the economically activity that a person performs for pay, profi t active population. or family gain. It includes paid employment; operating a farm or business; working for Unpaid family worker. A person who a household economic activity (like food works in an enterprise operated by a member processing or raising of livestock) without of his household or by a group of persons pay; working as an apprentice in order to including at least one member of his household, learn a skill or craft, without necessarily without a payment in cash or in kind. receiving wages; and production of paddy or vegetables, say, solely for home consumption. Urbanization. A process when a share Also, included is the holding of a job, even of urban residents in total population is if the person is temporarily absent because

MHDR 2007 147 NOTES

148 MHDR 2007

Employment and Poverty in Mongolia Summary (2024)

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