ULAANBAATAR, December 12, 2022 – Mongolia will need to create more and better jobs than created over the past decade while increasing opportunities for women, young people, and urban residents, according to a World Bank report released today.
Mongolia’s sustained economic growth of 5.4 percent on average between 2000 and 2019 powered job growth and an increase in real wages. More recently, the COVID-19 pandemic has brought real challenges, with employment dropping by around 5 percent in 2021, though the government’s recovery package mitigated a potentially steeper decline, according to the Mongolia Jobs Diagnostic.
“Mongolia’s current challenge is that the labor market is not strong enough to create sufficient quality jobs for a growing labor force and reduce unemployment,” said Andrei Mikhnev, World Bank Country Manager for Mongolia. “There is a continuous supply of a young and increasingly educated labor force, but more and better jobs need to be created to meet their aspirations. This calls for a more conducive policies for business environment to encourage quality job creation in the private sector.”
The report highlights that less than 60 percent of the working-age population (ages 15 and older) participated in the labor market, and only about half were employed in 2021. Women, urban residents, and people with an intermediate level of education have the lowest participation rates. The transition of young people into the labor market is not going well, especially for the less educated. Even young people with tertiary education have high unemployment rates.
Skills mismatches pose another challenge as an inadequate number of skilled workers are prepared in strategic sectors, according to the report. In addition, many recent graduates do not have the skills needed in the labor market, especially to fill higher-skilled jobs.
The Mongolian labor market challenges require a diverse set of interventions that include all parts of government, especially those responsible for private sector development. The report recommends more dynamic job creation in the private sector, upgrading the workforce via reforms to improve the skills development system, and enabling social assistance beneficiaries to work. Other recommendations include improving the functioning of the labor market via a comprehensive labor market information system, transforming active labor market programs into effective tools for employment, and improving the protection offered by unemployment insurance.
Support for the Mongolia Jobs Diagnostic report was provided by the Korea-World Bank Group Partnership Facility.