Boosting Long-Term Economic Growth through More Equal Labor Force Participation

Ulaanbaatar /MONTSAME/ Mongolia faces significant challenges in female labor force participation. Only 53.4% of working-age women participate in the labor force compared to 68.3% for men. The participation of women in the labor force is an important social and development goal, but it is also crucial for a country’s economic prospects. Policies and actions that promote gender equality in the labor market and workplace can have a positive impact on the female labor force participation rate (LFPR) and on the economic growth of the country. Asian Development Bank estimates show that eliminating gender inequality at work and at home in Mongolia could increase female LFPR to 63.2%. Such an increase would boost Mongolia’s annual per capita growth rate by 0.5 percentage points, increasing gross domestic product per capita by 16.1 percentage points overall in 30 years. Other countries experiences show that the female LFPR tends to increase when the time spent on unpaid care work is reduced, is shared more equally with men, and/or is made more compatible with work in the labor market. Government policies that promote increased participation of fathers in child rearing and/or promote gender equality in the labor market can have a positive impact on female LFPR. Despite having higher educational attainment than men, Mongolian women are less active in the labor market and earn less on average than men. The female labor force participation rate (LFPR) has fallen by 7.6 percentage points since 2000, whereas that of men has increased by 3.5 percentage points. The coronavirus disease (COVID-19), compounded by the limited availability of childcare services, has made things worse, with female LFPR falling by 1.6 percentage points compared to 1.2 percentage points for men. The country’s maternity and paternity leave policies and the retirement age negatively impact years of employment, earning, and advancement potential for women. There is no explicit clause on paid paternity leave in the Labor Code, which tends to be minimal, varying from 5 to 10 days in government institutions. Women’s professional development is also affected by their legal retirement age of 55, 5 years earlier than men, and the preference of employers to replace women who have reached minimum retirement age with younger employees. Mongolia’s Vision 2050 aims to increase the LFPR to 65% by 2030, and to 70% in 2050. To achieve this, progress on female LFPR is essential. Increasing LFPR has high economic returns and this policy brief provides a set of recommendations with a focus on labor market policy to boost female labor force participation by pursuing policies in the workplace through stronger leadership in government, strengthened advocacy, and increased public awareness and capacity building on gender issues, and by targeting gender design features in investment projects. Amend the Labor Code and increase retirement age for women. The Labor Code should be amended by adding entitlement measures of paternity leave and prevention and redress mechanisms for workplace harassment. Introduce gender-responsive incentives to increase female participation in the labor force. Gender-responsive fiscal policies should be designed to create conditions and incentives for women to work. . These may include tax regimes supportive of working families, subsidized childcare, or moving to household taxation away from individual taxation. The introduction of tax allowances and tax credits to encourage business entities to adopt re-skilling programs for mothers wishing to re-enter the labor market, and female employees aged 45 years old and above could be also considered. Integrate gender design into infrastructure projects. Experience in ADB projects shows that proactive gender-friendly design features in infrastructure projects can support women participation in the labor market. Strengthen employment promotion programs. It is crucial to develop job matching services to help women find opportunities, receive career counseling, increase their employability and social networks, and learn how to negotiate working conditions and wages. It is also critical to promote lifelong learning to enable women, particularly those returning to work after a period of absence, to keep up with technological changes in the rapidly changing world of work. Increase public awareness on gender equality. This could begin with a national debate on the unpaid care work of women. This is an important step in understanding the need to rebalance female unpaid care work by recognizing and rewarding unpaid work. Promote women’s political participation, agency, and leadership. Only 22.8% of political appointees are women despite representing 60.4% in public services. Promote gender-sensitive career guidance for adolescent girls and boys to address occupational gender segregation. A gendered and disaggregated study needs to be done to assess which sectors are averse to a particular gender, so that policy making can be adapted to the specific needs. Promote the guidelines on gender-inclusive workplace for private sector entities. To make the workplace gender-inclusive and family-friendly, it is important to disseminate and implement the guidelines on gender-inclusive workplace in private sector entities developed with ADB support. Asian Development Bank