UN Joint Programme

Does herders’ behaviour affect their active enrollment in social and health insurance programme?

The United Nations SDG funded Joint Programme on Extending Social Protection to Herders with Enhanced Shock Responsiveness presents the findings of studies on herders' behavior towards social and health Insurance.

In 2020, nearly 27% of all households in Mongolia (242,024 households) derived their livelihoods from livestock herding; 9% of the Mongolian population being registered as herders. While 32% of pastoralists were estimated to be poor (Ganchimeg et al., 2019), inequalities among herders persist. Five percent of herder households own 22% of all livestock, and about 45% of herder households own fewer than 200 head of livestock (the generally accepted threshold for subsistence (UN & ADB, 2018).

As Mongolian herders are getting older (and fewer younger Mongolians are opting for this occupation), having accessible and effective old-age pension, and health insurance systems, in place is of vital importance. Recent evidence on pension planning among Mongolian herders highlighted the fact that while representing one fourth of the employed population, only one in four herders was covered by social insurance (Ganchimeg et al., 2019). Providing effective and efficient social security protection to the herders in Mongolia is difficult, not the least due to Mongolia’s physical and human geography. The herders’ nomadic, or seminomadic lifestyle, creates challenges for the delivery and administration of social security (UN& ADB, 2018). Social protection programs have often been based on standard economic assumptions. These assumptions are challenged by work in the sub-field of behavioural economics, which provides evidence that individuals do not always exhibit economic rational behaviour. Hence, herders who would benefit from taking-up insurance and applying for old-age pension may not do so for a variety of reasons which were, among others, investigated in this research.

The Law on Social Insurance facilitates herders and private business owners’ right to voluntary insurance. However, voluntary insurance has proven to not be reaching its coverage objectives, and can put people at risk of not being insured and being excluded from social protection. The main design change to recommend is the shift from voluntary to compulsory insurance, ensuring the inclusion of specific tailored features for herders, such as the subsidization of the contributions and the differentiation of contributory categories.

The shift towards a mandatory system for Mongolian herders shall be the starting point of a comprehensive strategy comprising a number of subsidiary recommendations preparing a convenient policy environment for participants and establishing enforcement mechanisms. 

  • Recommendation 1: Suspend the clause on retroactive payment of social insurance contributions.
  • Recommendation 2: Draw a legal provision concerning the regulation for herders’ social insurance.
  • Recommendation 3: Tailor contributions to herders’ financial capacity.
  • Recommendation 4: Incentivize youth membership through reduced contributions.
  • Recommendation 5: Ensure and incentivize contribution collection and compliance
  • Recommendation 6: Increase and train the social insurance inspectors’ staff.
  • Recommendation 7: Facilitate access to social insurance services.
  • Recommendation 8: Improve knowledge of, and attitudes towards, social security schemes.