Mongolia has a unique and durable traditional culture, centered around the herding lifestyle. Herders remain semi-nomadic, moving their animals with the seasons as they have for centuries. Many urban Mongolians retain strong links to the land, both literal and sentimental, and the country's performing and visual arts often celebrate the landscape and the animals -- especially horses -- that are central to Mongolian life.

Economic transition in Mongolia, starting in 1991, has had far-reaching effects on Mongolian society. At its height, Soviet assistance (mostly in the form of subsidies) had totaled USD 900 million, or 30 percent of Mongolia's GDP. The Government adopted a "shock therapy" approach to privatization in an attempt to achieve a market economy as quickly as possible to lessen the hardship to its citizens. With the withdrawal of Soviet support, and drastic privatization policies, GDP dropped severely, hitting a low of -9.5 in 1992. Many microeconomic factors hindered a smooth transition, including a faulty financial infrastructure and highly inefficient state-owned enterprises. Privatization proved to be relatively successful, by 1999, the private sector accounted for 64 percent of enterprises, and GDP had reached 3 percent, following a high in 1995 of 6.3 percent.

Like other transitional economies, Mongolia is experiencing increased poverty, virtually non-existent during the many years of Soviet influence. Nearly 36.3 percent of the population live below the national poverty line of US$17 a month. Of these, about 18 percent are destitute with monthly incomes below US$10. Poverty is marginally more severe in urban areas.

Access to schooling and health services has declined, particularly among the poor. As a result, while key social indicators are good by comparison with countries at a similar stage of development and generally have not deteriorated, large differences emerge between those of the rural and urban sector and low- and high-income households.

Before the economic transition free education and social services (consisting of medical care, pensions, disability insurance and maternity benefits) were provided. Today, however, these services are underfunded. Some measures have been made for the creation of a new system including programs to aid socially vulnerable groups. In addition, efforts are still underway to establish a sustainable social insurance system that will cover broader areas.

Mongolia's economy is based on just two sectors - minerals, particularly copper, and livestock. Two thirds of the country's total population of 2.5 million live outside the capital, with the main occupation in the countryside being herding and livestock trading. Most herders own between 50 to 500 heads of cattle. In rural areas, privatization of herds has led to greater rural income inequality and marginalization of small herders.

Manufacturing is small and local in character but forms an important sector of the country's economy. The major products include building materials, processed food and alcoholic beverages, leather goods, woollen textiles, furs and wood items.

The most dramatic change in the structure of employment in Mongolia since 1990 has been the sharp reduction in the number of Government sector employees and the sharp rise in the share of the self-employed. The informal sector is experiencing rapid growth and provides income to approximately 40% of the working population. The analysis of the changes in the industrial distribution of the work force reveals a sharp rise in the share of agriculture, a more moderate rise in the share of trade and a decline in almost all the other sectors.

Mongolia is currently experiencing an environmental crisis called a dzud. This condition has been created through a combination of a drought in the summers of 1999 and 2000, with extremely cold winters in between.
There has been a massive death of livestock, over 1.4 million have been recorded as perished out of the 33.5 million in the country. The actual numbers are likely to be higher. Livestock is the sole source of income for most herders, and this loss has affected 500,000 people (20% of the total population). In addition to food, their cows, horses, sheep, goats and camels provide transport, heat and clothing. The effects of the disaster, however, will extend to the urban areas, as former herders will move to the cities, especially Ulaanbaatar, further saturating the labour market.

For all the economic instability of the country, the political situation has become very strong. The communist Mongolian People's Revolutionary Party (MPRP) ruled the country without any competition through the Soviet period. With the end of Soviet influence, grass-roots pressure and protests forced the Government to accept more democratic practices, and the newly formed opposition, the Democratic Coalition, took power in 1996. This coalition, however, never proved to be solid, and the now formerly communist MPRP regained control in elections held during the summer of 2000.

Shortly after, an Action Program of the Government of Mongolia was unveiled. It contained several key objectives including improving education and professional training, creating and improving social services and the expansion of trilateral cooperation between government, trade unions and employer's associations.

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FUNDAMENTAL PRINCIPLES AND RIGHTS AT WORK IN MONGOLIA

Extensive tripartite discussions were conducted in 2000 to assess the priorities of the Mongolian constituents. The priorities have been set as follows:

1. Employment promotion, especially SME and the informal sector
2. Industrial relations, including collective bargaining, working conditions and remuneration policies.

The Mongolian Government has proven itself to be enthusiastic about the ratification of Conventions. More encouraging, Mongolia has ratified several fundamental Conventions committing itself to the rights of workers. Mongolia currently applies 13 ILO Conventions. Fundamental Conventions Nos. 87, 98, 100 and 111 have been ratified, along with Conventions No. 155 on Occupational Safety and Health Convention and Convention No. 159 on Vocational Rehabilitation and Employment (Disabled Persons). Convention 182 was ratified by the Great Hural (Parliament) during the Autumn Session, 2000 (ratification registered on 26 February 2001). To date, Mongolia has ratified five out of the eight core conventions (C. 29, C.105 and C. 138 have not yet been ratified).

Recent ILO technical cooperation has focused on working with trade unions to fully disseminate their rights under the Conventions. Tripartite and Government seminars on the Declaration of Rights at Work, and studies on the implementation of future Conventions have been held. To this end, the ILO manual on International Labour Standards has been translated and published. Numerous workshops on International Labour Standards have been held and are being planned to reach all of ILO's constituents.

Mongolia has ratified the following 13 Conventions:

ILO/IPEC began working in Mongolia in November 1999. Mongolia has implemented a five point strategy to combat child labour which includes: capacity building, advocacy and awareness raising, direct action for working children and their families, improving working conditions as a transitional measure, and reproducing successful projects.

Some of the activities being planned under ILO/IPEC include:

CREATE GREATER OPPORTUNITIES FOR WOMEN AND MEN TO SECURE DECENT EMPLOYMENT IN MONGOLIA

Mongolia's economic reforms since 1990 have created a labour market drastically different than the one of ten years ago. The most striking change has been the movement of large numbers of workers from the State sector to the private sector, naturally following the privatization campaigns of the Government. Transition, which was done at a relatively quick rate, generally caused great difficulties for workers during the first few years.

Mongolia's population was a little over 2.4 million in 1998. From the perspective of the labour market, the key consequence of the sharp decline in fertility and the consequent slow down in the growth of the population has been a major shift in the age-structure of the population away from children and the aged towards the prime working ages. The share of children fell from 47 to 36 percent and the share of the 15-49 age group rose from 47 to 54 percent between 1989 and 1998.

The civilian population, consisting of persons of working ages between 16-59 for men and 16-54 for women, grew from1.13 to 1.26 million between 1992-1998. Although the civilian population grew during this time, the size of the labour force (defined as the sum of the employed and the unemployed registered with the Employment Regulation Agencies) more or less stagnated through this period. The not-employed non-student working-aged population grew from 150,000 in 1992 to 227,000 in 1997 before declining slightly to 221,000 in 1998. Women workers are mostly employed in the agricultural sector at almost 50 percent. Trade, education, health and social welfare, and manufacturing, in that order, are the other sectors with a share of 5 percent or more of the female work force.

Unemployment, extremely low before the loss of Soviet aid in 1989, has become an issue of concern. Unemployment has also recently been compounded due to an environmental disaster called a "dzud" that has cost many herders their entire herds.

Training is an important component to Mongolia's efforts to remain competitive in a market economy. Mongolia's National Poverty Alleviation Programme sought to increase vocational training opportunities. It has been particularly successful in upgrading training for persons with disabilities.

Prior to Mongolia's economic transformation, it relied heavily on cooperatives for income generation. The cooperative system was established around the 1930s and grew to over 147 cooperatives with over 10,000 members. At the height of the socialist system in Mongolia, the assets of the cooperatives were taken over by the state. At that point, the cooperative system suffered decline. Around 1992, a movement began to restore the cooperative system in the transitional economy.

In response, Mongolia enacted The Cooperative Law in 1998 and developed a national programme on cooperative development. The Central Union of Mongolian Industrial Cooperatives (CUMIC) has continued to encourage and support the cooperative system. The goal of the system is to serve local communities, create employment opportunities and alleviate poverty.

The ILO is lending technical support and expertise to cooperative development. In 1999, the ILO implemented a Rural Income Project that created mushroom growing cooperatives in the Hebei Province of China. The program was so successful the idea was expanded to Mongolia. First, a survey was commissioned to determine the feasibility of the mushroom project. The survey showed that the project has the potential of offering an ecologically sound product to Mongolia while also providing employment opportunities. Currently, a pilot project is underway with hopes that a full-scale project can be implemented.

In addition, ILO continues to cultivate other areas of income promotion. Several workshops on vocational education in the hotel, tourism and catering industry are being planned.

One of the major activities of the ILO in Mongolia was the National Consultation on Employment Promotion Conference (National Employment Conference) held in October 2001 in Ulaanbaatar. The Government, ILO and UNDP jointly held the Conference. Panel discussions were held on formal, informal and rural employment. Noted scholars and ILO experts attended and the Conference resulted in the production of a number of discussion papers on the employment situation in Mongolia. The Conference also addressed Mongolia's Law on Employment Promotion that had been enacted in June 2001. The objectives of the conference included:

One report carefully delved into the issues of work in the informal sector in Mongolia. Relying on secondary research, case studies and focus groups, the report reviewed various trends and made suggestions for areas of enhancement. The report noted that the informal sector plays an important role in the transition economy. It is also a relatively new area of Mongolia's economy. The informal sector grew after the downsizing and privatization of state owned enterprises, the structural change of economic production, the shift in effective demand for consumer goods and the migration from rural areas to aimag centres and the capital city. Many informal workers are middle-aged workers laid off from the formal sector and young workers just entering the labour force.

Women predominate in all sectors of the informal economy outside of transport services. Obstacles to the growth of the informal sector include burdensome government regulations, the lack of financing or credit and social security coverage for self-employed and informal sector workers.

ILO strategies for improving the informal sector include providing technical support to employment promotion strategies, policy formation, development of organizations and networks, promotion of financing schemes, expansion of social insurance and the improvement of health and safety conditions. The report was the basis of debate on how to improve conditions and opportunities for workers in the informal sector.

Work is also being done with the trade unions and employers to create decent employment in the informal and formal sectors through the development of small and medium-sized enterprises and entrepreneur work. Due to the growing importance of the informal sector in Mongolia's economy, the ILO is seeking to assist in the development of a workshop or conference devoted to the issue.

A number of follow-up activities have taken place related to the National Employment Conference. A team of ILO experts have undertaken several missions to Mongolia to conduct surveys and review existing conditions and policies. It is hoped that the information compiled during the missions can be used to develop projects on rural employment creation, the informal sector and the micro and small enterprises sector. The goal is also to create projects that take into account the effects and impact of globalization on labour.

The ILO is working with the Government in the formulation of labour market policy and the development of their capacity for the collection and analysis of labour market information. Statistics on employment, underemployment and unemployment are essential in economic and manpower planning and monitoring. They are needed for the effective implementation and monitoring of government policies and programmes of action for promoting employment and minimizing unemployment.

In Mongolia, official statistics are based extensively on censuses undertaken by aimag government officials at grassroots level and progressively aggregated to national level. Labour statistics based on administrative records are issued annually. Attempts have been made in recent years towards using internationally accepted methodologies, classifications and standards to achieve these aims.

The ILO is also working with the Government to improve and promote vocational and technical training programs. The goal is to develop programs to meet emerging occupation structures and to make them internationally competitive. To that end, the ILO has commissioned studies on human resource development and training to be used in long-term policymaking. Mongolia has also developed national programmes specifically addressing the issues of technical and vocational education.

ENHANCING THE COVERAGE AND EFFECTIVENESS OF SOCIAL PROTECTION IN MONGOLIA

The 1998 Living and Standards and Measurements Survey showed that about 36 percent of the population live under the officially defined poverty line, with 20 percent of Mongolians living in extreme poverty. The urban poor that accounted for 57.2 percent, are in an especially vulnerable position, given the higher costs of housing and staple foods in Ulaanbaatar, the coldest capital of the world, with winter temperatures falling 40C below zero. Being homeless in Ulaanbaatar in such winter conditions is life threatening. The official unemployment rate is about 6.5 percent, around 40,000 people.
Under the command economy before 1990, the social security system was based on a combination of consumer subsidies, universal benefits supported by the central budget, and state sector wages. All sectors of society were covered by the pension system and the state also provided a comprehensive range of social protection benefits to families, children, and groups designated as "vulnerable". However, since 1990, the old system has collapsed and a new social security system has been established. The new system mainly consists of social insurance including pension, health care, unemployment, employment injury and other benefits as well as social welfare, which are regulated by the following labour and social security laws promulgated by the parliament (the Ikh Hural):

Although extensive laws have been put in place, their effective implementation has been challenging to the Government. Under the Ministry of Social Welfare and Labour (MSWL), there are two main agencies responsible for implementing the above laws. One is the State Social Insurance General Office (SSIGO) and the other is State Social Welfare Office (SSWO). Both of them exercise a vertical administration throughout the country. In addition, the State Labour and Social Welfare Inspection Agency (LSWIA) has been established as a regulatory agency to provide efficient professional inspection services concerning the enforcement and implementation of the labour and social security laws and to protect the rights and interests of employees.

The SSIGO administers five social insurance funds that are supported by the social insurance contributions both from employers and employees as well as budgetary subsidies. The contribution rates of the five schemes are as follows:

Insurance branch Employers' contribution rate(%) Employee contribution rate(%)

At present, the compulsory social insurance covers 92 percent of the employed with 22 percent of herders and self-employed covered on a voluntary basis. Over 94 percent of the population are covered by the health insurance.

The social security system in Mongolia is facing challenges and difficulties. First, general budgetary constraints limit benefit levels of both social insurance and social assistance. Second, non-compliance with compulsory social insurance or evasion of contributions is a concern. Third is how to improve efficiency and effectiveness of social security administration in order to provide quality services. And last, but not least, is to improve the policy-making process through the strengthening of a tripartite Social Insurance National Council (SINC) and the capacity building in social security governance for various stakeholders.

ILO is providing technical support for a situation analysis and needs assessment of the current pension system and advising on future directions for adopting a partial funding system. Capacity building on social security issues is being enhanced by ILO programmes that are conducted with relevant agencies. The ILO is also identifying needs and gaps for international technical cooperation in this field. The creation of legislation to improve collection of labour migration-related statistics has also received the benefit of ILO technical support. To improve employment opportunities for persons with disabilities, ILO plans to conduct workshops on employment of disabled persons.

The Country Objective Statement, completed in 1995, described the current safety conditions in many industrial plants to be far from satisfactory, and that this aggravated risks for workers, the public and the general environment. It was therefore proposed that a sectoral review be conducted by the ILO to globally assess the situation in the field of working conditions and occupational safety and health. A series of seminars on the subject have been held every year to help indentify the problems, and provide technical assistance to strengthen capacity.

The Government of Mongolia conducted a national survey on OSH in 1997, which revealed that 18.7 percent of the workforce was working under inappropriate conditions and that about 5,700 people became disabled and lost working abilities. Based on the survey results, a National Programme on Improving Working Conditions (1997-2000) was developed and implemented. The Labour Law, came into force on 1 July 1999, includes a chapter on OSH and its supporting regulations have been developed. Several related Codes of Practice have also been developed to implement the Labour Law. Mongolia has ratified the ILO Convention No.155 on Occupational Safety and Health in 1998.

One of the most important developments was the creation of a database for OSH in Mongolia. This database is run by officers of the National ILO/CIS Centre for Mongolia, the Inspection Agency of MoHSW. Information has been collected since the beginning of February 2000.

Even though the Government saw a reduction in the number of industrial accidents, injuries and deaths at the end of 2000, it is not reducing its efforts. It is continuing to look for ways to deal with OSH issues in light of the bankruptcies and closures of many previous SOEs which have resulted in the decrease and shrinking of national industrial production on one hand, and less reporting of industrial accidents and injuries on the other.

At the same time, the number of occupational diseases has not been reduced. It is anticipated that they will increase in the future given the latency time of most occupational diseases.

In July 2001, the Mongolian Government approved its second National Programme on Improving Occupational Safety and Health Conditions (2001-2004) to continue its efforts to improve the OSH situations by setting objectives and measures as well as developing an Action Plan indicating the responsible organizations and time frame to implement the activities set by the National Programme.

Recently, the ILO, through an international ILO programme funded by the Danish Government, has assisted in strengthening national capacity on OSH training. Two training manuals have been developed and printed for the training of State Safety inspectors and safety council members of the enterprises. A few pilot training courses using the training manuals developed have been conducted with the participation of the ILO OSH specialists.

The ILO, under the ASIA-OSH Project funded by the Finnish Government, provided technical assistance focusing on OSH awareness raising and information sharing with the development of a website, an OSH database and studies in various aimags.

In addition, the ILO also helped the Mongolian Employers' Federation (MONEF) to apply the ILO WISE (Working Improvements in Small Enterprises) approach in Mongolia. The MONEF now has full capacity to hold workshops and training sessions on WISE with the objective of enabling small enterprises to make low-cost improvements that will increase the level of safety at the workplace. The ILO also organized study tours to provide the government officials with opportunity of learning from other counties' good practices on OSH.

TRIPARTISM AND SOCIAL DIALOGUE IN MONGOLIA

The last ten years have seen an extensive growth in the status of social dialogue in Mongolia. Previously, trade unions were essentially an extension of the state, and a part of the centrally controlled economy. With economic transition, and the labour laws that followed, trade unions were given an independent role, and were guaranteed their freedom of association, collective bargaining and right to strike. Tripartite negotiations among government, trade unions and workers have existed since 1991.

The public authority for labour issues has changed over the years. However in 2000, the Ministry of Social Protection and Labour was established and is the authority for labour issues today. Membership in the Confederation of Mongolian Trade Unions (CMTU) began to rise dramatically in the 1990s. And the Mongolian Employers Federation (MONEF) began in 1990. MONEF has approximately 4,000 companies as members.

The ILO has worked closely with all its tripartite constituents. ILO's relationship with MONEF dates back to the beginning of the organization. ILO has provided technical assistance to MONEF in the form of activities to build training capacity and their expertise in industrial relations.

It has also helped MONEF develop programs on occupational safety and health in the private sector. The program has resulted in the development of training materials and train-the-trainer courses. Although workers and employers are now fully independent from the government, further ILO assistance will be necessary to ensure effective tripartism, particularly in view of the long history of trade unions and the more recent emergence of employers' organizations in the wake of democratic transition. Work in recent years has consisted of training union officials in collective bargaining and grievance handling, and in building the capacity of the Mongolian Employers' Federation in providing services to its members.

ILO is assisting in the establishment of a "Cooperative Promotion Centre" to increase effectiveness of cooperative development in Mongolia. The Cooperative Centre will be supported by workshops on negotiation and grievance administration.