Ulaanbaatar, January 5th, 2021
EuroChamber Mongolia’s held an urgent and highly constructive meeting with the Minister of Labour and Social Protection, Ms. Ariunzaya A, and the Director General of the Employment Policy and implementation and Coordination Department, Mr. S. Dambii on December 28th.
The attendees from EuroChamber side were Mr. Tomas Bravenec, Executive Director of EuroChamber, the working group Co-Chairs Ms. Tuvshinjargal M., HR Director of MSM Group and Ms. Ganchimeg B., HR Director of Orano Group/Badrakh Energy, and Ms. Khishigjargal B., Policy officer of EuroChamber.
EuroChamber formed a new Working Group “Revised Labour Law” in October last year, based on increasing interest of our members in the impact of the thoroughly updated Labour law. The Working Group attracted strong participation by leading companies, as well as received thankfull professional input from PWC Mongolia and the Mongolian Mining Association. The resulting Position Paper contains detailed analysis of key impacts and several recommendations, including:
- The introduction of 14 on-14-off days roster plus a week of quarantine imposes significant increase of salary cost for the affected companies (esp. mining, construction and others). It forces employers to hire an additional 25% of employees, which will be in high demand at the same industry sector, thus creating a bubble of demand. This will add to the shortage of Labour force on the market, adding to the financial burden for the companies due to additional employment need.
- Employing a temporary or contractual employee costs more than full-time employees, which makes it difficult for the companies to hire and/or retain the right personnel. Along with the shortage of Labour force (explained in point 1 above), and due to the expected salary increase pressures, this will decrease the competitiveness of companies and the sector as a whole.
- There were several un-clarities, contradictions and some unpractical proposals in the law regarding: * calculations of working and commuting hours, issues with overtime calculation, which result in unrealistic increase of average salary; * the employment regulations for fixed term.; * other issues reg. calculations of the average salary and the complications in calculating vacation days. This, in combinations with absent implementation guidelines, creates legal and potentially compliance risk for all employers.
- The Position Paper proposes to postpone effective date of some provisions and/or for the Government to be flexible on implementing the Revised Labour Law parts where the related Implementation Guidelines are not finalized and approved by the Ministry of Labour and Social Protection and to allow sufficient period for preparation for companies to adjust accordingly. Out of the 26 planned Implementation Guidelines, only 4 were published and approved and 22 are pending.
The Position Paper is available exclusively to the members of EuroChamber.
The topics covered in the meeting with Minister A. Ariunzaya were:
- The “Revised Labour Law” are expected to increase total Labour related cost by 30-40%, i.e. increasing total production cost by about 10%, thus threatening to decrease competitiveness of Mongolian mining and other effected industries (e.g. construction), potentially leading to further decrease of FDI/ investors interest in those sectors.
- On the other hand, several employee groups will be affected by 25-40% salary income decrease, having negative impact both on employees and the ability of companies to keep their skilled employees.
- While the law will be valid from 1.1.2022, 22 out of the 26 Implementation Guidelines are yet to be finalized by the Ministry, which is creating uncertainties for the companies to implement the new law. According to the Minister, it is expected that all guidelines will be adopted before Tsagaan Sar 2022.
During our meeting with the Minister Ariunzaya we have agreed on the following:
- The Ministry will consider carefully EuroChamber’s Position Paper and recommendations during the process of making the Implementation Guidelines
- The Ministry of Labour and Social Protection will organize an explanatory trainings on the “Revised Labour Law” for EuroChamber’s member companies in January-February 2022
- EuroChamber highlighted to the Minister that the absence of clear implementation guidelines at the time of validity of the amended law creates potential compliance and legal risks for companies, and we asked that the Ministry of Labour and Social Protection and other Government agencies would be lenient until there is sufficient clarity and training available.
Please stay tuned for any new updates on this important topics from EuroChamber, we will post expected training session dates before mid-January 2022.
Therefore, if you want to deliver your comments and suggestions, please do not hesitate to contact us by: firstname.lastname@example.org and/or +976 99660240.
About EuroChamber Mongolia
Leading European banks and companies active in Mongolia founded the EuroChamber in 2019 with the aim to foster Europe-Mongolian business relations, investment and trade. The founding member companies are: EBRD, ING Bank, MSM Group, Termigas Impianti Tecnologici and ARI Net Associates. The Chamber enjoys strong cooperation with the EU Delegation and national European diplomatic representations to Mongolia.
EuroChamber concluded a close Cooperation agreement with DMUV, FMCCI and BBG, thus now representing a united voice of European business in Mongolia and over 150 members. The mission of EuroChamber is to contribute to the improvement of business and investment climate in Mongolia through targeted advocacy and policy dialogue with the Government and other stakeholders.
For further information about the EuroChamber, including media requests please call 9575 2050 or write to email: email@example.com