They keep leaving the country, what should be done?

Jargal Defacto
Jargal Defacto 1k Views
11 Min Read

(A message for those running for office in the 2024 Parliamentary elections)

There are 3.6 million of us, Mongolians. Our population will reach 4 million in 2033. How many of this 4 million will live abroad then? How many of us are currently employed and how many live abroad? What are the main causes of decreased employment and increased emigration as well as the reason behind low return rate among those who moved abroad? What should be done for Mongolians to earn decent income and live quality life in homeland?

Dwindling employment…

As of today, Mongolia is home to 2.1 million people considered to be of working age – aged 15 and over, of whom, 1.2 million or 58 percent are in the labor force, and 893 thousand or 42 percent are out of the labor force (retired, studying, or other). Around 91 percent of the labor force earns an income, while the remaining 9 percent has no income and “does not seem to figure it out (D.J)”. In the meantime, 47 thousand people or 5.2 percent of those who are out of the labor force qualify as having the potential to join the labor force based on factors such as having no job to earn wages or income, actively looking for work in the last 30 days, or ready to work immediately when the opportunity presents). (National Statistical Office – NSO.2022).

Among the 104 thousand unemployed people in Mongolia, 67 thousand are men and 38 thousand are women. 36 percent of the unemployed population have university degrees. The number of unemployed people rose by 3.2 thousand compared to the same period last year. Youth (aged 15-24) unemployment rate is at 18 percent or 19 thousand people. (NSO.2022)

Labor force participation rate (relation between those earning income to the labor force) stands at 58 percent as on 2022. The same figure is 72 percent in Estonia and 70 percent in Singapore. Mongolia had the rate of 65 percent back in 2006. The evaluation for this figure covered 2.1  million people in the labor force whiule excluding certain groups such as those living away from their family, residing abroad, serving the military or being imprisoned.

Rising emigration…

The officials report there to be around 200 thousand Mongolians living abroad. According to the 2024 NSO report, there are 141 thousand citizens (76 thousand women and 65 thousand men) residing abroad for 6 months or more. The number of those “migrants” equal 3 percent of Mongolia’s population with half of them being over 32 years old and having lived abroad for an average of 7.2 years. As for the destinations, 3 out of 10 people live in South Korea, 2 in the United States and Japan, and 5 in other countries.

In 2023, the NSO conducted an analysis on the data of 1865 people living abroad for 6 months or more in countries including South Korea, the US, Japan, Kazakhstan, Czech Republic, Australia, PRC, Germany, Sweden, France, Russian Federation, Turkey, Austria, Switzerland, the UK and others. Broken down to the details, 63 percent of those people are female, 70 percent possess a diploma or higher qualification, 34 percent are single while 40 percent live with their family with 1-3 family members. 85 percent have residence permits and 72 percent have jobs. It was reported that 40 percent of them do not plan to return to Mongolia and 23 percent intend to become a citizen of their country of residence.

Why does this outward flow persist?

The NSO recently published a research report “Emigration of Mongolian Citizens and foreign personal transfers and their impact” conducted among households in Mongolia with a family member living abroad.

44 percent of those moving abroad were for economic reasons, 36 percent for education, and 13 percent for accompanying family members. 80 percent of 15-34-year-old migrants moved to study, while 80 percent of those aged 35 or above moved for work or accompany their families. 40 percent of those moving for work or accompanying family were already employed while in Mongolia. The average monthly income of their remaining households in Mongolia is 1.5 million tugriks, mainly consisting of pensions, allowances, and wages. 4 out of 10 households have no employed members. This clearly demonstrates the issue of low wages in Mongolia and the failure to meet the needs of families.

What now?

Salary is a regular payment made by the employer for the products and services produced by an employee in a certain period of time. Salary is correlated to productivity. Given that all other factors are constant, higher productivity means more value is created and usually beings an increase of wages.

The main condition for labor productivity increase is free competition. In any sector, wages can increase only with free competition or a free market. The competition pushes its losers into bankrupcy. It needs to be noted that the more government involves itself in the economy, the less free competition occurs. It is impossible for a private enterprise to compete with the state. In every country Mongolians choose to go, the government’s participation in the economy is low. The state is a machine that does not create value, but rather distributes it through taxes.

In countries with abundant natural resources and weak citizen participation and oversight, government involvement tends to be excessive. This is even more evident in a country like ours where the economy is entirely dependent on mining.

The basic condition for free competition is free prices. Energy and fuel prices should be bed on competition and fluctuate freely. If not, the product or service will become scarce, out of stock and even disappear. As the “state-controlled price” is set lower than the cost to produce, the producer goes bankrupt. The time has come to transform all state-owned companies into public and joint-stock ones.

Another reason why the wages are low is the high taxes in Mongolia. Our thirty-year old taxes rates are even higher than the centuries-old tax rates set in Western countries where their citizens have mastered the payment of taxes and accessing proper services worth their payment as well as exerting oversight on the government. For decreasing the taxes, the government needs to be small and highly productive. All taxes need to be halved and youth need to be exempt from some taxes completely. Isn’t it the time to put the tax revenue from natural resources to use for helping the citizens get rid of pit latrines through building inexpensive compact homes and renting them out?

To decrease the interest rate of the banks, BoM needs to make the policy rate zero. The main condition for decreasing savings interest rate is the profitability of investing in bonds and shares over saving the money in banks. In order to achieve that, the companies must have credibility and reliability. Again, free competition and transparency are the prerequisites.

To put a halt on the plummeting value of the tugrik, the money made from mining needs to be invested in emerging sectors, particularly preparing young professionals it IT to develop AI-enhanced products. A dedicated program needs to be implemented to enable the novel products to be exported to the global market.

In the agricultural sector, herders need to supported in becoming collectives based on the grazing grounds or bagh units, accessing investment loans to advance in value chain and receiving incentives based on quality over quantity.

A major business opportunity with the quickest export prospect is the three projects to develop international aviation academy, aircraft repairing facility, and pilot training course.

All these efforts are made made possible by foreign investment. Foreign investment comprises foreign money, management and know-how. Of course, they are not missionaries. They come for profits. We need the resourcefulness to attract foreign investment and establish joint ventures and keep the technology as in the example of China.

The NSO report reveals that the emigrants planning a return to Mongolia mostly ask for “improvements in livibality factors and provision of services including healthy and pleasant environment, decreased air pollution, better health, education and social services, robust food security, stable economy”. We, the ones who are currently in Mongolia also need all this.

To lead a prosperous life as a whole family in our homeland, the above-mentioned measures need to be taken at least. Or else, with everyone fleeing, someone might have to say “to the last person leaving, please turn off the lights”.

Us, Mongolians can develop our country and ourselves, rid our government of corruption, and lead a prosperous life based on the free market.

Translated by Munkh-Erdene Davaajav

Ulaanbaatar

2024.04.26

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