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Research Questions

  1. How does Mongolia perform on labor-market indicators compared with similar countries and economies?
  2. What are the major constraints to Mongolian labor-market performance?
  3. What are Mongolian youth aspirations in education and work, and how do they differ by gender, location, age, education, and labor-force status?
  4. What are the challenges faced by Mongolian youth in attaining the education and training they need to advance their employment aspirations?
  5. How do youth prepare for employment, how do they find out what they need to do to prepare, and how do they find out about employment opportunities?
  6. To what extent are youth aware of government supports to assist their employment transitions, and to what extent do they utilize those services?

Despite a recent slowdown, Mongolia has experienced dramatic economic growth in the 2000s, exceeding global trends. Foreign direct investment, mining, infrastructure spending, and, more recently, strong fiscal and monetary stimulus measures have driven much of this growth. The country now faces challenges in terms of creating jobs without overly relying on public spending fueled by natural resource exploitation. In 2014, the Mongolian government commissioned RAND to collaborate on a study of the labor market with the Institute for Labour Studies (ILS) of the Mongolian Ministry of Labour. Using a supply-demand framework, this study analyzed the Mongolian labor market to identify where it is performing well, where it is underperforming, and whether there are constraints to improvement. RAND and ILS especially focused on youth labor and education issues, using a new survey developed by the two organizations. The ILS and RAND teams chose this focus because of the importance of youth labor-market success to the economic future of the country and because analysis of Mongolian labor data showed relatively high rates of youth not in school or the labor market compared with a variety of other economies, including other similar transition economies. The Mongolian Ministry of Population Development and Social Welfare has recognized this importance by announcing 2015 as the year of youth development. The ILS-RAND Mongolian Youth Survey is a nationwide survey that provides new insights into the challenges faced by youth, as well as their achievements and aspirations, to inform the development of policy to address these concerns.

Key Findings

Formal Employment Is Rising, but It Is Still Less Than Informal Employment and Animal Husbandry Combined

  • Formal jobs have generally better working conditions, require fewer hours per week and days per month, and pay more than informal jobs or animal husbandry.

The Productivity of Employment Is the Main Problem of the Mongolian Labor Market

  • Unemployment in Mongolia is not high by international standards; however, a large share of employment is in low-productivity sectors and jobs.
  • The trends in educational attainment and enrollment in Mongolia are positive, and education pays off strongly. An increasingly large number of young people are seeking four-year degrees, potentially at the expense of attaining technical and vocational skills.

Technical and Vocational Education Training (TVET) Institutions Provide a Special Challenge

  • Some people who complete a TVET education earn relatively high salaries, but there is great variability.
  • Shortages in occupations that TVET institutions prepare people for suggest they are not meeting demand for skills.
  • Mongolia has embarked on major reforms of its TVET institutions, including improving the curriculum, improving equipment, and upgrading the skills of instructors.

Mongolia Has a High Rate of Youth Not in Employment, Education, or Training (NEET)

  • Compared with similar economies, Mongolia's NEET rate is high, particularly among males, and particularly in aimag centers and Ulaanbaatar.
  • Of particular concern is the category of NEET youth labeled idle. These youth are not contributing to the economy, not building skills, and not helping at home. They represent lost future potential to themselves and the country, and their welfare is especially at risk.

Recommendations

  • Ensure access to education, especially for rural and NEET youth.
  • Incorporate "soft skills" and critical thinking into education programs and curricula.
  • Provide career guidance throughout a student's time in school.
  • Strengthen and formalize internships between employers and education institutions to provide practical training.
  • Move toward international standards in the new TVET qualifications framework.
  • Increase cooperation and consultation with the private sector to continue to improve TVET and align it with labor-market needs.
  • In the long term, consider the consolidation of TVET institutions.
  • Enhance short-term training in TVET institutions.
  • Enhance coordination between the ministries of Labour and Education, Culture, and Science to better direct efforts to improve education and labor-market outcomes.
  • Use the school system to identify and intervene early with youth at risk of NEET.
  • Provide more guidance and counseling when problems are present among NEET youth.
  • Improve the investment climate in aimag centers.
  • Conduct evaluations of government employment services' accessibility and quality, particularly awareness, access, and utilization among youth and recent migrants from the countryside who might be looking for work.
  • Conduct outreach in schools and youth-serving organizations.
  • Introduce competition by allowing private employment offices to charge fees.
  • Continue social welfare reforms, considering labor-market effects and using conditional cash transfers.
  • Continue pension reforms, considering labor-market effects.
  • Improve transportation links to facilitate labor flow.
  • Repeat the ILS-RAND Mongolian Youth Survey.
  • Launch a longitudinal survey of youth.
  • Conduct a labor-market needs assessment (employer survey).
  • Investigate job-market motivations and barriers for women.
  • Investigate job-market motivations and barriers for the disabled.
  • Investigate job-market motivations and barriers for older people.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    The Supply of Mongolian Labor

  • Chapter Three

    Lost Potential: The Case of NEET Youth in Mongolia

  • Chapter Four

    The Demand for Mongolian Labor

  • Chapter Five

    Labor-Market Outcomes: Employment and Unemployment

  • Chapter Six

    Labor-Market Outcomes: Low-Productivity Employment and Skill Mismatch

  • Chapter Seven

    Policy Implications

  • Appendix A

    International Comparisons

  • Appendix B

    Methodology

  • Appendix C

    ILS-RAND Mongolian Youth Survey Questionnaire

This research was undertaken within RAND Labor and Population.

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