COPING WITH THE GLOBAL ECONOMIC CRISIS IN MONGOLIA
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Transmission Channels and Social Impacts The primary impacts of the crisis were observed through labor market effects and price shocks, both of which affected the poor disproportionately. The economic downturn also had social impacts—changed gender relations and increased alcohol abuse and crime. Labor Market Effects The economic crisis had a major impact on the labor market, with rising unemployment, reduced salaries, and intensified competition for scarcer jobs. Increased difficulty in finding employment was reported by recent university graduates, urban migrants, low-skilled people, and those working in the informal sector. The bargaining power of employers increased, and a number of interviewees reported wage cuts and abusive practices by employers, including requests to work longer hours for the same salary, paying below the agreed amount, or hiring workers on a probationary period and firing them after one or two months without paying the salary. Discrimination in hiring decisions based on age, gender, and appearance (for women) was also common. Employers often gave preference to workers under the age of 30; furthermore, some organizations preferred hiring men for fear of incurring losses because women are entitled to a oneyear maternity leave. Recent migrants to Ulaanbaatar were most affected by reduced employment opportunities due to low skills and lack of connections, which were increasingly important in a job search. They also had low awareness of workers’ rights and were particularly vulnerable to employers’ abuse. Shrinking employment opportunities in the formal sector contributed to increased competition for informal sector jobs and a decline in incomes of informal sector workers. For example, the number of people engaged in illegal gold mining increased dramatically between May 2009 and February 2010 despite the health risks and the hard physical labor associated with this activity. The increased number of miners reduced individual chances of finding rich sites and correspondingly reduced miners’ incomes. Workers engaged in small-scale tourism activities reported fewer clients than in the precrisis year, yet the number of service providers went up. Similarly, many small businesses, particularly those engaged in trade and service provision, reported that sales went down by half in comparison to the precrisis year.