School-to-Work Transitions in Mongolia

Relatively little is known about the youth labour market in Mongolia. This report addresses the issue by taking advantage of a recent ad hoc School To Work Survey (STWS) on young people aged 15-29 years carried out in 2006 by the National Statistical Office of Mongolia (NSO) with the International Labour Office’s (ILO) financial and technical assistance. Chapter 1 studies the macroeconomic conditions of the country: economic transition from a planned to a market economy has caused the emergence of unprecedented problems, such as macroeconomic instability, the emergence of the private sector and the ensuing need for new and higher skills. Chapter 2 focuses on the youth labour market by looking at the determinants at an individual and family level of educational attainment, employment, unemployment and inactivity. Educational attainment is relatively high and increasing, as compared to other countries in the area, which mirrors the perceived need for new and higher skills, confirmed by the declared aspirations of young people. Nonetheless, important constraints seem to affect the supply of education, especially in rural areas. In addition, the country is unable to provide young people with a sufficient number of decent jobs. This translates into high youth unemployment in urban areas and very low productivity jobs in rural areas, especially in the livestock sector. Chapter 3 applies the ILO school-to-work classification disentangling young people: a) with completed transition; b) “in transition”; and c) whose transition has not yet started. Only 0.9 per cent of the sample has completed their transition into decent jobs. The “in transition” group has about three times the unemployment rate, due to the very high portion of young workers wishing to change their job or experiencing important work deficits. Four types of work deficit have been identified: a) about 60 per cent of young employed workers work informally; b) about 74 per cent have a fixed-term contract; c) 12 per cent do not pay income tax; and, d) about 40 per cent work more than 50 hours per week. Chapter 4 studies the size and composition of the demand for skills. It is based on answers to the specific employers and managers’ module of the Mongolian STWS. The evidence confirms firms’ needs for higher skills and work experience than those actually possessed by young people. There also seems to be a mismatch between job search methods preferred by employers and by young people. This report concludes with a number of policy suggestions for policy-makers and practitioners at all levels, such as: a) the need to increase the quantity and quality of the supply of skills, especially in rural areas; b) a more active role of the Public Employment Service (PES) in providing information, counselling and training not only to the unemployed, but also the discouraged workers and jobseekers who are still at school; c) a closer integration between the educational system, governmental institutions at all levels and social partners to reduce imperfect and asymmetric information on job vacancies, as well as to increase and diversify the supply of on-the-job and off-the-job training for young people. JEL Classification: I21, J13, J24, J31, J62, P30, R23