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Support for Mongolia’s unemployed

By O.SHURENTSETSEG

Unemployment is the state of not working. Unemployed people cannot earm money to meet their own needs and they expect support from the government.
The Human Development Fund has been distributing 21,000MNT and food stamps for quite some time. This welfare policy increases the mentality of “ready money” and reduces the incentive for youth to find employment.
The definition of unemployment includes people who are unemployed but actively seeking employment. The definition excludes people who are not willing to work. In other words, people who don’t seek employment and stay at home are not considered to be unemployed. Statistics concerning the nation’s employment rate only includes job seekers categorized as registered unemployed citizens.
The National Statistics Office reported that a total of 45,200 people were registered at an employment agency as unemployed as of the first half of this year. Around 66,900 people were registered at province and capital employment agencies, where 12,600 people found jobs and 60,200 people were excluded from agency services due to not actively seeking jobs.
The unemployment rate has increased by 20.6 percent, equal to 11,400 more unemployed people. The number of people who have found jobs through employment agencies has decreased by 19.4 percent, or 3,000 people. However, the number of people who are not actively seeking a job has increased by 25.7 percent, equal to 12,300 people. This is the only official data concerning people who were registered as unemployed. It is difficult to predict how many people are unemployed and not seeking jobs. Many people believe the increase in the unemployment rate is due to the ready money provided by the Human Development Fund.
These people enjoy the privileges of being unemployed. Working individuals can obtain a consumer loan at a 20 percent interest, whereas unemployed individuals can obtain a soft loan. Loans with two-year terms and a 10.2 percent interest rate are available for unemployed people to support them in their search for a job. These soft loans are not available to working individuals, as the bank requires them to pay higher interest rates. Banks don’t require non-working individuals to pay high interest rates. Following this rule, taxpaying entrepreneurs are not able to get soft loans.
Most entrepreneurs fail after paying high interest rates to commercial banks and trying to meet collateral requirements. Unemployed individuals can satisfy loan requirements without providing collateral. The government changed the process for unemployed people requiring collateral, as the government provides loan guarantees. These privileges further decrease incentive for working.
Some individuals would really like to work, and some do not. Individuals who are not willing to work should be excluded from official unemployment surveys. If the government continues to offer this kind of support to the nation’s unemployed, our economic situation will continue to decline.
It has become common to support unemployed individuals during an economic crisis. The government provided soft loans of 60 billion MNT, divided into five and 10 million MNT packages, in order to create jobs. Though some companies used the loans for opening karaoke bars and motels, the government is still talking about the loans being issued to the wrong people. It is the right time to invest in secure and stable economic entities. At least 97 percent of the nation’s 39,800 small to medium-sized entities have the capacity to hire up to 50 employees, but it is still hard to establish a business in Mongolia due to the small size of the market.
The most effective way to develop youth employment is to invest in secure entities and provide them with soft loans and decrease their taxes. A great amount of money has been spent on establishing medium-sized entities, and they need on-going support like soft loans to operate profitably. Currently, most entities are losing money during the crisis, and workers are the key assets to recovering from the economic crisis we face.
Medium-sized entities already have their collateral requirements met, which means the government doesn’t have to provide banks with loan guarantees, just lower interest rates. By investing in medium-sized entities with 50 employees or more we can improve youth development and overcome the economic crisis. Furthermore, the banks should decrease interest rates on consumer loans. We can see now how individuals have benefited from low interest rate-housing loans.
Seventy-thousand individuals obtained eight percent interest housing loans. As a result, the construction industry market grew by 140 percent within one year. Individuals who obtained this loan were working, income-earning employees, because a social security payment history is one of the main requirements from banks. The status of being employed and having steady income is vital to individual and national success.

Source: Undesnii Shuudan

Short URL: http://ubpost.mongolnews.mn/?p=15912

Posted by on Aug 25 2015. Filed under Opinion. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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