Informal Economy in Mongolia: A Stakeholder Workshop

This is an inception, planning and stakeholder mobilization event of the ILO RBSA project on Promoting formal employment for inclusive and diversified economic growth (MNG/18/01/RBS). During this workshop, the ILO will engage with its tripartite constituents and other national and development partners to agree and come up with a matrix of coordinated actions to contribute to set objectives of the project.

Background

The Mongolian economy has undergone a boom-bust cycle. The spectacular economic growth in the first decade of the 21st century has declined in the second decade. The period following 2012 has seen a dramatic contraction of the annual growth rate of labour productivity and the share of informal employment in non-agricultural sector doubling between 2006/7 and 2016, from 12.7% to 26.3%. More women than men have non-agricultural informal wage jobs especially in the retail trade and service sectors, according to a joint publication of ILO and NSO (National Statistics Office) “Accelerating the 2030 Sustainable Development Goals through Decent Work: SDG monitoring and country profile for Mongolia” (ILO and NSO, forthcoming).

In 2013, the informal economy was estimated to provide livelihoods to nearly one-third of the population and to contribute to about 35% of the GDP. The Asia Foundation reported that in 2015 in the capital city of Ulaanbaatar, 87% of companies with less than 9 workers and a 107,000 individual traders were estimated to be operating informally. Business operators in Mongolia’s informal economy face significant challenges to expand. Their operational challenges range from finding skilled workers, training workers, accessing financial services, understanding labour laws, and seizing market opportunities (MONEF and EPCR, “Formalizing Enterprise”, 2015). Additionally, more than 25% of employment in formal business is temporary (ILO, 2016). The NHRCM labour rights survey in 2016 revealed a high prevalence of informality practices in SMEs: young and women workers are often not paid for their work, face arbitrary hiring and firing decisions, often work long hours, and are not declared to public authorities.

As reflected in the Decent Work Country Programme of Mongolia for 2017-2021, the ILO is providing support to the constituents in addressing the above mentioned challenges through promotion of formal employment for inclusive and diversified economic growth (by implementing a RBSA project for 2019-2020).

Objectives of the workshop

  • To provide a common background on conceptual framework around informality, Mongolia’s informal employment and policies for formalization in the informal sector;
  • To discuss and identify priorities for formalizing the informal sector in Mongolia including main issues and target groups;
  • To map the actors and coordination mechanisms including role of social dialogue for the transition from informal to formal economy;
  • To discuss and agree on a matrix of coordinated actions, potentially the general one and specifically those to be supported by the project.
The ILO specialists together with national experts will provide technical inputs during the workshop to be attended by about 50 participants from the ILO constituents, partners and other actors including MLSP, GASI, General Authority for Social Insurance, General Authority for Labour and Welfare Services, Research Institute for Labour and Social Protection, Ministry of Food, Agriculture and Light Industry, Ministry of Construction and Urban Development, National Development Agency, AFCYD, Ulaanbaatar City Governor’s Office, Ulaanbaatar city employment department, NSO, CMTU and MONEF.