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Labor market paradox

Ms Munkhchimeg.D, Researcher, EPCRC Mongolias competitiveness: Where are we heading? May 18, 2012

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Executive Opinion Survey shows that

-Finance skills -Qualified engineers -Competent senior managers -Information technology skills -Skilled labor

ARE NOT READILY AVAILABLE

SCARCITY OF LABOR

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Why scarcity?
Demand Mining boom: large scale mining projects such as OT, TT Construction boom: large scale infrastructure projects such as The New Development Supply Skilled workers comprise only 20% of Mongolia`s laborers (After the initial transition shock in 1990s the number of students in TVET declined sharply)

Deficit of skilled workers


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Why scarcity?
FDI into the mining sector increased dramatically

High salaries of mining companies have lured away competent staffs from other sectors

Scarcity of labor within domestic companies Dutch Disease

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Higher Education Achievement


As the tertiary education in Mongolia has expanded rapidly over the past decade, the number of people who have higher education in Mongolia is quite high
33.0% 30.0% 26.0% 25.0% 68.3%

Mongolia 6

Malaysia 11

Kazakhstan 3

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Thailand 13

Singapore 1

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Ukraine 15 0.0%

80% 70% 60% 50% 40% 30% 20% 10% 0%

58.0%

37.0%

35.0%

34.0%

21.0%

20.0%

20.0%

18.0% Slovak 13

Bulgaria 8

Qatar 10

Peru 4

Russia 9

Mexico 12

Korea 2

Chile 5

Slovenia 7

18.0%

Higher Education Quality


35,847 students were graduated in 2011, but
36% or only 12,975 graduates were hired

Graduates have inadequate skills for effective adaptation into the labour market

64% entered the unemployed stratum

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2011 Employment Support Year


72,000 new jobs for Mongolians 62,000 jobs for foreigners The number of registered with the Labor & Social Welfare Service unemployed increased by 51.6% to 58,400, according to the NSO Unemployment rate reached 9.9% in 2010

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80% 70% 60% 50% 40% 30% 20% 10% 0% Qatar 1 74.9% 61.2% 56.4% 54.2% 49.4% 49.1% 48.8% 46.4% 44.2% Singapore 2

Thailand 3 Peru 4
Kazakhstan 5 Russia 6 Korea 7 Slovenia 8 Ukraine 9 Slovak 10 Chile 11 Mexico 12 Bulgaria 13 Malaysia 14
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Employment

42.6%
42.5% 40.7% 40.6% 38.2% Mongolia 15

Employment (percentage of population) in 2010 Mongolia: 37%, ranked 15th

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37.2%

16% 14% 12% 10% 8% 6% 4% 2% 0% Qatar 1 0.3% 1.0% 2.2% 3.4% 3.7% 3.7% 5.4% 5.8% 7.2% 7.5% Russia 10 Chile 11 Ukraine 12 Mongolia 13 Bulgaria 14
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Thailand 2

Singapore 3 Malaysia 4
Peru 5 Korea 6 Mexico 7 Kazakhstan 8 Slovenia 9

Unemployment

Unemployment (percentage of labour force) in 2010 Mongolia: 9.9%, ranked 13th

7.5% 8.1% 9.9%

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10.2%
Slovak 15 14.4%

New Legal Environment


2010 Law on Vocational Education and Training 2011 Law on Employment Promotion

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Conclusion
The labor market requires more governments attention

Both vocational and higher education system should be based on labor market demand
Due to the economic growth and the start of new development period, more skilled workers needed To revamp higher education curriculum in order to ensure students possess the relevant skills in meeting the demand of employers and align education with international standards

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Thank you for attention


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