This information is derived from the State Department's Office of Investment Affairs' Investment Climate Statement. Any questions on the ICS can be directed to EB-ICS-DL@state.gov
Last Published: 8/4/2017

The National Statistics Office of Mongolia (NSO) reports that as of May 2017, 9.1 percent of the 1.24 million people defined by the NSO as economically active were unemployed. Youth unemployment (15-34 year olds) currently hovers around 57.6 percent of total unemployed. There are currently approximately 5,900 foreign workers officially registered with the Ministry of Labor (MOL), two-thirds of whom work in construction, mining, and manufacturing. More than one-third of the foreign workers are from China.

The Mongolian labor pool of nearly two million workers is generally educated, young, and skilled. Unskilled labor is abundant but shortages exist in most professional categories requiring advanced degrees or vocational training, including all types of engineers and professional tradespeople in the construction, mining, and services sectors. Foreign-invested companies deal with these shortages by providing in-country training to their staffs, raising salaries and benefits to retain employees, or hiring expatriate workers with specific skills and expertise unavailable in Mongolia.

Mongolian labor laws are not particularly restrictive. Investors can locate and hire workers without using hiring agencies, as long as hiring practices follow the 1999 Law on Labor of Mongolia (LOL). The LOL requires companies to employ Mongolian workers in all labor categories whenever a Mongolian can perform the task as well as a foreigner. This LOL provision generally applies to unskilled labor categories. If an employer seeks to hire a non-Mongolian laborer and cannot obtain a waiver from MOL for that employee, the employer can pay a monthly waiver fee. Depending on a project’s importance, MOL can exempt employers from 50 percent of the waiver fees per worker. However, employers report difficulty in obtaining waivers, due in part to public concerns that foreign and domestic companies refuse to hire Mongolians in the numbers that they should.

Because Mongolia’s long, cold winters limit outdoor operations in the infrastructure development, commercial and residential construction, and mining exploration sectors, employers tend to use a higher degree of temporary contract labor than companies that can operate year-round. Current law allows for employers and employees to employ these short-term contracts.

Employers have expressed concern over the package of proposed amendments to the LOL currently under consideration by the GOM. If passed by parliament in 2017, the proposed amendments would mandate that employers, the government, and the Confederation of Mongolian Trade Unions (CMTU) form a committee to set actual work hours and conditions, rather than allowing employers and employees to contract directly based on actual labor needs. Both foreign and local employers have advocated against this change and other proposed amendments to LOL, noting that such changes restrict their ability to respond to fluctuating market conditions.

The LOL currently allows workers to form or join independent unions and professional organizations of their choosing and protects rights to strike and collective bargaining. However, some legal provisions restrict these rights for foreign workers, certain public servants, and workers without formal employment contracts, though all groups have the right to organize. The law protects the right of workers to participate in trade union activities without discrimination, and the government has protected this right in practice. The law provides for reinstatement of workers fired for union activity, but the CMTU stated that this provision is not always enforced. According to the CMTU, some employees occasionally face obstacles to forming or joining unions, and some employers have taken steps to weaken existing unions. For example, some companies use the portion of employees’ salaries deducted for union dues for other purposes rather than forwarding the monies to the unions. Some employers have prohibited workers from participating in union activities during working hours, despite being mandated by law. There have also been some violations of collective bargaining rights, as some employers refuse to conclude collective bargaining agreements in contracts.

The law on collective bargaining regulates relations among employers, employees, trade unions, and the government. Wages and other conditions of employment are set between employers (whether public or private) and employees, with trade union input in some cases. Laws protecting the rights to collective bargaining and freedom of association are generally enforced. The Tripartite Labor Dispute Settlement Committees (TC) resolves the majority of disputes between workers and management and consists of representatives from Mongolia’s CMTU, employers, and the government. However, management and legal contacts state that TCs are not compliant either with the existing labor law or Mongolia’s 2013 Law on Mediation. Cases that cannot be resolved by TCs are referred to the courts. For Mongolian labor laws as they relate to union activity, see the 2016 Mongolia Country Report on Human Rights Practices.

The LOL allows employers to fire or lay-off workers for cause; however, depending on the circumstances, severance may be required and workers may seek judicial review of their dismissal. The statutory severance package requires employers to pay laid off workers one month of the contracted salary; fired workers receive no severance. Laid off or fired workers are entitled to three months of unemployment insurance from the Social Insurance Agency.

The International Labor Organization (ILO) has expressed concern about child labor practices that vary with Mongolian law and international labor standards. Authorities report that employers often do not follow the law, requiring minors to work in excess of the permitted hours per week and paying them less than the minimum wage. The General Agency for Specialized Inspections (GASI) enforces all labor regulations; however the agency is understaffed, with only 1,250 inspectors. GASI Inspectors are authorized to compel compliance with labor statutes, but its limited capacity, combined with the growing number of privately owned enterprises, limits enforcement. Additional information on the ILO conventions ratified by Mongolia are available on the ILO website.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.


More Information

Mongolia Economic Development and Investment Law