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What can we learn from the new labor law in Mongolia?

Labor regulation reforms can affect employment creation, earnings, and staff’ well-being, in addition to the financial efficiency of companies. Whereas there’s intensive literature on labor rules, most deal with OECD countries and some major emerging economies. Labor rules and their impacts will not be almost as nicely documented and understood elsewhere.

As a part of the World Bank’s recent Mongolia Jobs Diagnostic, we spotlight key findings from the current labor legislation reform in Mongolia. Mongolia’s expertise is fascinating for 2 causes. First, as a small, resource-rich nation now searching for to diversify and modernize its economic system, Mongolia’s property and its challenges are widespread amongst many low- and middle-income international locations. Second, in contemplating coverage reforms, Mongolia has been grappling with methods to replace a regulatory framework to answer a quickly altering financial and social context.

In 2022, Mongolia enacted a brand new Labor Regulation that changed laws adopted within the days after its transition from a deliberate to a market economic system within the early Nineties. Our overview of the brand new laws discovered that the brand new legislation usually introduced Mongolia’s labor rules extra according to practices in different international locations and ILO worldwide requirements, most notably by introducing new protections for staff. The brand new rules are nonetheless comparatively versatile, and the overview carried out for the Jobs Diagnostic suggests they don’t seem to be a hindrance to job creation.

Mongolia’s recent reform points to two priorities for effectively regulating labor markets in developing countries to respond to changes in their economies and their societies: modernizing labor regulations and improving enforcement and compliance. 

Modernizing labor rules

Labor legal guidelines want to answer modifications within the financial and social contexts by which they function. The nature of work is shifting quickly with the growth of non-standard employment, similar to platform work, which raises points that differ from these related to industrial jobs. In the meantime, altering household roles and rising pressures on each women and men to steadiness work and household obligations requires regulatory approaches that accommodate these new realities. While developed countries have been implementing reforms to reflect these trends, this is not the case in most developing countries, despite the fact that they are being affected by similar developments. 

Mongolia’s new legislation considers these modifications within the group of labor and in society. By introducing provisions that acknowledge non-standard types of employment whereas offering extra assist for working households, the reform goals to enhance general job high quality and to encourage labor pressure participation.

The legislation defines labor rights and dealing circumstances for part-time, distant, and home-based work, which weren’t included within the outdated legislation. The final precept is that each one types of work needs to be handled equally. For instance, the legislation states that home-based staff ought to entry the identical labor rights as full-time staff working on the employer’s office.

On the identical time, the legislation displays the evolution of parenting roles and the necessity for reconciling work and household life, adopting a gender-balanced method. Mongolia offered 120 days of maternity depart within the outdated legislation. The brand new legislation introduces paid depart for fathers (no less than 10 working days), which was not within the outdated legislation. As within the outdated legislation, employers additionally have to grant parental depart for childcare if a mom or father with a toddler below three years of age submits such a request. Whereas prolonged leaves might probably discourage employers from hiring staff with kids, particularly ladies, and there are different hindrances similar to social norms on gendered roles, offering authorized rights for parental depart for each ladies and men remains to be a key step to selling gender equality.

Enhancing enforcement and compliance

Efficient regulation relies upon not solely on content material but additionally on enforcement. Whereas Mongolia’s new labor legislation places employee safety extra according to altering realities and worldwide requirements, it doesn’t absolutely tackle the difficulty of how to make sure compliance.

The brand new labor legislation offers inspectors the proper to inspections with out prior notification to employers, however in actuality, this proper can’t be exercised as a result of it doesn’t adjust to the Regulation on State Inspection that prohibits inspections with out prior notification to employers. There may be at present a draft legislation on “Short-term Suspension of Sure Sorts of State Inspection Actions,” which proposes a short lived suspension of scheduled inspections for 3 years. Moreover, the legislation doesn’t change the truth that labor inspections are performed in response to complaints from staff who should determine themselves. This has a chilling impact on complaints and enforcement.

Lastly, Mongolia could have restricted capability to implement the brand new legislation. Whereas it has expanded protection to extra work kinds and a wider set of office points, inspection businesses do not need elevated sources commensurate with their obligations. There have been solely 85 registered labor inspectors in 2020, which suggests there was one inspector for about 14,000 employed individuals.

There was proof of serious non-compliance up to now. This contains not offering extra time advantages, paying lower than the authorized minimal wage, and extreme working hours (Determine 1). The typical variety of weekly working hours was 51 hours in 2019, which is increased than the 40 hours regulated by legislation, and 22.8 p.c of all staff labored greater than 60 hours per week. Except the inspection procedures and sources are improved, it’s unlikely that the Labor Regulation, together with its new options, will obtain the specified goals.

Determine 1: Proportion of inspected entities not complying with the legislation in Mongolia

Supply: Knowledge obtained from Common Company for Specialised Inspection (GASI).

Mongolia’s new labor legislation has options that tackle the quickly altering world of labor. Nonetheless, it’s equally essential to attenuate the hole between the rules said within the books and their efficient implementation. Growing international locations have sometimes been stretched to cut back this hole due to restricted sources and excessive ranges of casual financial exercise.

This problem will solely improve as labor legislation should now cowl a proliferation of employment kinds, altering ideas of the “office,” and extra numerous workforces. Mobilizing extra sources and introducing improvements in enforcement have to be prioritized for reaching efficient labor market regulation in Mongolia and different creating international locations.


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