The Lost in Storm

UB Post

October 15, 2010

Our government is always with events and acts just only to ‘extinguish the fire’. It is obvious that the man, who always goes downwind and is lost in storm, is not able to think and plan something. Probably the government had suddenly noticed last week that almost 40% or 1.1 million people of total population is able-bodied, 140 thousand of them had gone abroad and 200 thousand is unemployed, only 1/5 of all able-bodied population are active job seekers and the rest just rely on their monthly incomes. As their reaction, they said they are going to do two things: first is to pass a law on export of own citizens abroad and import of foreign workers to Mongolia and the second is to create a national integrated information network of labor market registration and information.

The government lost in storm seems like just following its nose. The problem of labor force in Mongolia is that job seekers do not have satisfactory skills to meet requirements of vacancies and that their professional diplomas and certificates do not guarantee its concepts.

By creating a giant registration and information system, you cannot just make the labor force skilled and qualified. Our government acts in a way of “racketeering” of foreign investors and is overdosing that some 3,300 specialists are to be prepared in three years with the investment of Oyu Tolgoi as if they have managed it. The health minister and his deputy made a mountain out of a molehill by laying a foundation stone for the building extension of Maternity Hospital No.1. Indeed the money for the extension was “donated” by Boroo Gold Company.

Foreign companies have not entered Mongolia to build a school or a hospital. They are forced to finance all these. It is obvious that they will deduct such costs from the tax they will pay later. It is legitimacy that foreign companies must run operations and pay taxes as the others do and the Government must collect the tax to make necessary investments according to a certain plan.

Don’t you think it is a good idea to order each foreign investor entering Mongolia to build a particular facility, without the need of ministries in charge or parliamentarians? If the government could act in far-sighted and planned way, then the development benefits would be sufficient for all citizens and would provide equal opportunity for education and employment. An industrialized country means the one, whose citizens have job and are paid enough to have sufficient livelihood. There are two basic reasons why the minimum wage rate is so low in Mongolia. Firstly, social and health premiums and income taxes imposed on wage are high. Secondly, the labor productivity is low.

Labor productivity of Mongolians is low in Mongolia while it is high abroad, which means there is no fair competition in any business field. Let us have a look at labor force problem in case of mining industry. The mining industry creates fewer jobs compared to the investment made to the industry. However, we must use existing opportunities in a proper and beneficial way since this industry is only sector that makes big money for Mongolia. Though Chile and Peru both allowed huge investment to their mining industries like we are doing now, the results were relatively different. The poverty rate has significantly reduced in Chile, but it did not change in Peru. If 44% of Chilean population was below the poverty line (US$1 income per day, or less) in 1987, after two decades it has reduced to 18%.

Today, the average salary rate is US$800 in Chile. Chile has taken a number of significant actions to diversify its economy and improve the population livelihood; the most attractive one is how it solved its labor force. Three keystones of Chilean reform strategy were to make its human resource high quality, carry out business reform capable to create value and to develop basic science on strategy.

Out of several steps towards building the quality human resource, the most noticeable step was rational and efficient solution of issues concerning jobs and employment. First of all, they had a thorough investigation into functions and requirements of jobs in each mining company and summarized results according to each sector. Afterwards, they had defined which training framework, practice and skills are in demand and had prepared teachers and instructors at first.

They involved all concerned parties to this mission to establish standards of skills for every worker and work out training schedule meeting this standard. Workers are trained and evaluated under this standard and training schedule, to get their professional certificates. Because the latest standards of training, examinations and evaluation from the beginning were prepared not under own standard but under the standard approved by the Organization for Economic Cooperation and Development (OECD), the worker is capable to work in any mine in any country once he got that professional certificate.

Generally, it is quite better and more effective to directly copy best standards in the world for local application and use knowledge and experience of specialists efficiently, than preparing or correcting them on your own. It has been many years since Chile has used a translated version of French civil and criminal laws, without making any corrections or alterations. In Chile, the Cabinet selects ministers from technocrats, not according to political membership but to their skills and knowledge.

There was a time when thirteen ministers out of 15-cabinet member of Mongolia had been doctors of sciences. Anyway, the time has come to adopt a strategic policy intended to replace nonrenewable mining resources with renewable knowledge resource and implement it in all fields step by step.

Translated by P.Shinebayar