1. human resources development
service of korea
Medium to Long-term
LABOR SUPPLY-DEMAND
FORECAST
Billion tugrik
12000
10,414.1
10000
8000
5678
5,498.5
6000
1360
4000
2104
2000
3010
705
976
807
1272
0
2012
2022
Agriculture
2012
2022
Mining and Quarrying
2012
2022
Manufacturing
2012
2022
Service
2012
2022
GDP
2013
2. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Foreword
We have developed a medium to long-term
labor market forecasting (pilot) model for
Mongolia for the first time. The timing of this
model development coincides with the structural
changes in population and the rapid economic
growth expected in the country which require
changes in labor policies on the labor force
participation rate and labor productivity.
We have forecasted major changes in the labor
market until 2022 in terms of 19 industries and
10 major occupational groups using the model.
One of the major objectives of labor policies is
to promote inclusive growth by developing the
national labor force. It implies to improve the
higher and vocational education system, and
labor productivity in industries.
On the other hand, labor studies provide
school leavers and the current labor force with
information on the choices of occupation and
directions to enhance their skills.
We will be working to promote the forecast
results for policy making and information
purposes. In 2014, we have two objectives to
improve the forecast. First, the forecast will be
based on the sub-classifications of industries
and sub-groups of occupations. As a result,
there will be more detailed information for a
policy making purpose. Second, we will consider
various policy scenarios so that we will be able to
forecast the effects of proposed policy changes
on the labor market outcomes.
During the period in which we publicized
the results of the pilot model, the President
of Mongolia initiated the manifesto on the
principles of a smart government and the
government reported that it would keep a policy
not to increase the number of government
employees. When we introduce these policy
changes in the model, the forecast results would
be quite different as the additional employees
in the government sector forecasted by the pilot
model would have to be allocated across the
other industries.
It is important to maintain the capacity building
taking place in the modelling and forecasting
sector at the Institute of Labour Studies and
develop its cooperation with other advisory
organizations.
I would like to thank the officials at the
Ministry of Labour of Mongolia and Ministry of
Employment and Labor of the Republic of Korea
who supported our work.
1
3. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
I would also like to congratulate to Human
Resources Development Services of Korea
and “Gerege Partners” LLC on their successful
collaborations with us.
I hope that you will find the forecast results
useful for the purposes of policy making and
information providing leading to the efficient
allocation of national human recourses.
CHIMEDDORJ MUNKHJARGAL
Director of Institute for Labour Studies
2
4. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Table of Contents
Chapter 1. Medium to Long-term Labor Supply-Demand Forecast
Introduction and Method
1.
2.
3.
4.
Significance of labor supply-demand forecasting.............................................................. 5
Forecasting procedure and method.................................................................................... 5
Statistical data used for forecasting....................................................................................7
Work required to be undertaken further............................................................................7
Chapter 2. Major Results of the 2013-2022 Medium to Long-term Forecast
1.
2.
3.
4.
Labor force forecast........................................................................................................... 9
Employment forecast by industries................................................................................... 16
Employment forecast by occupation................................................................................. 21
Unemployment rate forecast.............................................................................................25
3
5. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Chapter 1
Medium to Long-term Labor
Supply-Demand Forecast
Introduction and Method
4
6. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
1
Significance of labor supply-demand
forecasting
Labor supply-demand forecasting acts as a signal
that prevents and alleviates likely imbalances in
the labor market. One type of an imbalance in
the labor market is labor force with a university
degree is unable to find suitable employment
opportunities for an extended period of
time. The main reason for such a situation is
asymmetric employment information between
labor providers and employers. In this case,
the supply-demand forecast acts as a signal
that contributes to the efficient development
and allocation of national human resources. In
general, the forecast performs both a policy
function and an information function. The policy
function: the forecast acts as the main data for
the government policies on employment, industry
and education (human resources development).
The information function: the data provided
by the forecast is used for decision making
2
on career or occupation selection. Through its
information function, the forecast assists the
labor market entrants to reach rational decisions
which improve the efficiency of the labor
market.
In this respect, a need to develop a labor market
projection system for Mongolia has arisen. The
development of this system has been initiated
by the Institute of Labor Studies of the Ministry
of Labor and the first pilot model of the labor
market and its results are presented in this report.
On the pilot model, two consultancy teams have
participated as well. The national consultant is a
team of economists from Gerege Partners LLC
the main role of which was to carry out the
model simulations. The international consultant
is a team of labor market experts of HRD Korea
advised on the model development.
Forecasting procedure and method
The medium to long-term forecast consists of
the following two parts:
§ labor supply forecasting (labor force
forecasting)
§ labor demand forecasting (employment
forecasting).
Figure 1-1 shows the sequence of steps to carry
out the medium to long-term forecast. This
is the simplified version of the Korean labor
supply-demand forecasting system.
1 The Korean model is the adaptation of the US Bureau of Labor Statistics model.
5
7. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Figure 1-1. Medium to long-term labor market forecasting system
Working age population forecasting
GDP by industries
Labor force participation rate forecasting
Employment coefficient forecasting
(by industries)
Economically active population forecasting
(Labor supply)
Employment forecasting by industries and
in aggregate (Labor demand)
Labor supply-demand forecasting
“Industry-occupation” matrix forecasting
Based on the population forecast, the labor
supply forecasting initially projects 1) the
working age population (15 and older), 2)
the labor force participation rate, and 3) the
economically active population. In particular, the
working age population and the economically
active population are determined by age (age
strata in five-year increments) and gender
(male, female). The forecast period is 10 years.
The employment forecasting calculates 1) the
employment size in aggregate and by industries
by using projected industry growth rates and
the employment coefficients (the inverse of
6
labor productivity) by industries. Next, 2)
the employment by industries is converted to
employment by occupations using the forecast
of the industry-occupation matrix. Finally, 3) the
labor force forecast and employment forecast
results are used to calculate the economy’s total
unemployment rate and employment rate. The
employment forecast is disaggregated by 19
industries as well as by 10 major occupational
groups of National Statistical Office (NSO)
of Mongolia. The forecast period for the
employment is 10 years, the same as that for the
labor force forecast.
8. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
3
Statistical data used for forecasting
Basic statistical data used for the forecasting
includes the International Monetary Fund
(IMF)’s GDP projections for Mongolia, the NSO’s
population growth projection, the NSO’s labor
force survey and the NSO’s GDP by industries
(for a detailed description, refer to Table 1-1).
The NSO’s population growth projections, in
particular, the Medium Fertility Scenario (2B) is
used for the labor supply forecast. The working
age population is the total number of people
who are aged 15 years of age and over and
is determined by using the NSO’s labor force
survey (LFS). The economically active population
is also derived from the LFS and is the sum of
employed and unemployed population.
The IMF’s GDP projections, the share of each
industry’s GDP in the country’s aggregate GDP in
the NSO’s statistical reports and the data on the
number of employees in each industry in the LFS
reports are used for the employment forecast.
Table 1-1. Statistical data used for the forecasting
Indicators
Population projection
Working age population
Economically active population
GDP by industries
Employment by industries
Employment by occupations
by major groups
4
Source
Renewed population growth
projection /2010-2040/
Labor force survey
Labor force survey
National income
GDP projections
Labor force survey
Labor force survey
Prepared by
Comment
NSO
by age and gender
NSO
NSO
NSO
IMF
NSO
NSO
by age and gender
by age and gender
by main industries
in total
by main industries
ҮАМАТ-08 /ISCO-08/
Work required to be undertaken
further
As mentioned above, the pilot model for the
medium to long-term labor supply-demand
forecast of Mongolia has been developed through
this project. From the experience of the Korean
labor market studies, the extension of this model
is possible as well as required. For example, the
employment forecast by sub-industries and sub-
occupational groups will generate more detailed
information. Also, by determining labor supply
by each occupational group and forecasting
the labor market for each occupational group,
the entrants in the labor market and school
leavers will have an opportunity to choose their
occupations rationally.
7
9. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Chapter 2
Major Results of the 2013-2022
Medium to Long-term Forecast
8
10. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
1
Labor force forecast
The labor force (or labor supply) forecast has been carried out in accordance with the following
three steps.
Figure 2-1. Process for aggregate labor supply forecast
Population Trend and
Projection
(by age, 15 and older)
Participation Rate
Projection
We forecast the labor force (or the economically
active population) of Mongolia until 2022 by
using the historical data on the economically
active population and the working age (15 and
older) population and labor force participation
rates.
A. Working age population forecast
The annual “labor force survey” (LFS) reports
the actual working age population who are 15
years of age and older. However LFS does not
forecast the working age population. To forecast
the working age population, we use the NSO’s
population growth projection 2010-2040. The
projection is based on “Population and Housing
Census - 2010” and has six scenarios for each
age group because of different projections of
Economically Active
Population (Labor Force)
Projection
fertility rate, mortality rate and net migration.
The projected 15 and older population until 2022
from the Medium Fertility Scenario or 2B – the
most suitable scenario of the population growth
projections - has been used in this study. The
projected 15 and older population from the NSO’s
projected population growth could not be taken
and used straight away due to methodological
difference of the LFS - the size of the working
age population in the LFS tends to be smaller
than the population of 15 and older reported
in the statistical yearbooks. Therefore, it was
required to adjust the forecast of the 15 and
older population until 2022 by forecasting this
difference.
9
11. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Figure 2-2. Projected 15+ population (by gender, age groups, 1000 people, 2000-2022)
Male
Female
Male
Female
65+
50-54
45-49
45-49
40-44
40-44
35-39
35-39
30-34
30-34
25-29
25-29
20-24
20-24
15-19
50
55-59
50-54
50
60-64
55-59
150
65+
60-64
15-19
150
150
50
2000*
Male
50
150
2012**
Female
Male
Female
65+
40-44
35-39
35-39
30-34
30-34
25-29
25-29
20-24
20-24
15-19
150
45-49
40-44
50
50-54
45-49
2017***
55-59
50-54
50
60-64
55-59
150
65+
60-64
15-19
150
50
50
150
2022***
* Source: “Annual Population Employment Reports” submitted by aimags and UB offices of NSO.
** Source: NSO’s labor force survey
*** Projections
10
12. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Table 2-1. Projected 15+ population (by age groups, 2002-2022) (unit: 1000 people, %)
Population
(1000)
(%)
Growth
/Decline
(1000)
Annual average
growth rate
(%)
2007
2012
2017
2022
2007
2012
2017
2022
‘07-’12
‘12-’17
‘17-’22
‘07-’12
‘12-’17
‘17-’22
Total
15+
15-64
1632
1529
1812
1700
1982
1872
2139
1993
100.0
93.7
100.0
93.8
100.0
94.5
100.0
93.2
180
171
169
173
157
121
2.1
2.1
1.8
2.0
1.5
1.3
The age group of 30-54 years, which has the
highest employment rate, is forecasted to
increase by 2.3 percent in the first half and by
2.2 in the second half of the projected period.
This group will be expanded by 21,900 people
annually in the period of 2012-2022.
Table 2-1 shows that the 15-64 population will
have a roughly constant share of 93-94 percent
in the total population in 2007-2022. The share
of young people of 15-29 years of age in the
total population has been declining constantly
in the last ten years and this trend is likely to
continue until 2022.
15-29
664
670
693
642
40.7
36.9
35.0
30.0
6
23
-51
0.2
0.7
-1.5
30-54
758
881
989
1100
46.4
48.6
49.9
51.4
123
108
111
3.1
2.3
2.2
55+
210
261
301
397
12.9
14.4
15.2
18.5
52
39
96
4.5
2.8
5.7
Table 2-2 shows the 15 and older population by
gender. It is evident that the share of women
is much higher compared to men and this
trend is likely to continue in the next ten years.
Approximately 48 percent of the population of
this age group is men and 52 percent is women.
In the first five years, it is estimated that the
number of men will increase by 2.1 percent but
decline to 1.4 percent annually in the last five
years of the projected period. In contrast, the
increase in numbers of women will be relatively
steady around 1.6 percent.
11
13. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Table 2-2. Projected 15+ population (by gender, 2002-2022) (unit: 1000 people, %)
Total
Population
(1000)
(%)
Growth/
Decline
(1000)
Annual average
growth rate
(%)
2007
2012
2017
2022
2007
2012
2017
2022
‘07-’12
‘12-’17
‘17-’22
‘07-’12
‘12-’17
‘17-’22
B. Labor force participation rate forecast
The labor force participation rate is determined
by the ratio of the economically active population
to the working age (15 and older) population.
Based on the data of labor force participation
rate for 2006 to 2012, we forecast the labor
force participation rate by gender and age
groups until 2022 (Table 2-3).
From Table 2-3, one can see that the general
labor force participation rate which was 63.5
percent in 2012 will increase slightly to 63.7
percent in 2017 and will decline to 62.5 percent
in 2022. With respect to age groups, the labor
force participation rate has the biggest decline in
the age group of 15-29 which may be linked to
12
Male
1632
1812
1983
2139
100.0
100.0
100.0
100.0
180
170
156
2.1
1.8
1.5
Female
786
870
965
1036
48.2
48.0
48.7
48.4
84
95
71
2.1
2.1
1.4
846
942
1018
1103
51.8
52.0
51.3
51.6
96
75
86
2.2
1.6
1.6
the desire to attain education. The participation
rate is the highest in the age group of 30-49
– over 80 percent. However, disaggregation
by gender shows that men’s participation rate
is the highest between 25-49 years of age
while for women it occurs later between 3049 years of age. Men’s labor force participation
rate will increase by 1.4 percent until 2017 and
thereafter it will decline. Meanwhile women’s
labor participation rate will decline between 1544 years of age. However, with the family life
becoming relatively stable between the ages of
45-54, women’s labor force participation rate
will increase.
15. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Total
58.4
57.2
55.9
-1.2
-1.3
-2.5
15~19
42.3
25.0
17.3
17.8
-7.8
0.5
-7.3
20~24
55.4
46.7
42.7
41.3
-4.0
-1.4
-5.4
25~29
63.9
68.8
66.7
65.7
-2.1
-1.0
-3.1
30~34
67.8
74.9
73.2
72.2
-1.6
-1.0
-2.7
35~39
65.8
81.4
80.9
81.1
-0.5
0.2
-0.3
40~44
68.2
84.5
83.6
83.6
-0.9
-0.1
-1.0
45~49
66.7
80.6
80.6
80.8
0.0
0.2
0.2
50~54
Female
61.0
56.6
66.5
68.5
69.9
2.0
1.4
3.5
-0.9
0.2
-0.6
55~59
38.5
37.6
37.9
60~64
18.8
20.0
18.9
1.2
-1.1
0.1
65+
12.2
9.0
8.7
-3.2
-0.3
-3.5
* Source: Annual population employment report (NSO)
C. Economically active population forecast
The forecasts of the 15 and older population and
labor force participation rate are used for the
estimation of the economically active population
forecast by age group and gender (Table 2-4),
which determines the total labor supply.
Table 2-4 shows that while the economically
active population was 1,151 thousand in 2012 it
will increase by 186 thousand people reaching
1,337 thousand in 2022. By gender, the number
of men is higher than women and this trend is
likely to continue in the next 10 years. In the
last five years the annual average growth rate
14
of the male labor force was 3.2 percent, this
number is forecasted to decline to 2.5 percent in
the first half of the projected period and drop
further to 1.2 percent in the second half of the
projected period. This latter reduction is associated with both the reduction of men’s labor
force participation rate in the final five years of
the projected period (2018-2022) and the steep
decline in the number of men of 15 years of age
and over in the same period. Women’s annual
average growth rate is relatively stable around
1.1-1.2 percent over the projected period.
17. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
The economically active population forecast
by age groups is shown in the Table 2-5. The
population aged 15-29 was 354 thousand in 2012
and is forecasted to increase to 359 thousand
in 2017 but decline to 318 thousand in 2022.
While in the first half of the projected period
the annual average growth rate of this age
group is 0.3 percent, in the second half it will
2
Employment forecast by industries
In order to forecast the labor demand, we project
the value added of each of 19 industries of the
Mongolian economy as well as the employment
coefficient (the inverse of labor productivity) of
each industry.
A. Industry value added forecast
In Mongolia, there is no medium to long-term
forecast for GDP by industries. The reason could
be that it depends on many factors and putting
them together requires complicated techniques.
In this study, we simply extrapolate the observed
share of each industry’s value added in the
aggregate GDP by using data for 2000 to 2012.
Next, we adjust IMF’s projection for Mongolian
GDP*2.
2 According to the IMF, the unemployment rate in
Mongolia would decrease continuously and reach 3
percent by 2018 (source: World Economic Outlook
(October 2013)). We think that it is debatable
to consider it as the long-term (natural) rate of
unemployment. Instead, we assume that the
natural rate of unemployment is about 6 percent.
16
have a sharp decline and drop to -2.4 percent.
However, the population aged 30-54, which
forms the significant portion of the economically
active population, is forecasted to grow but with
a diminishing rate. The annual average growth
rate of the population aged 55 and over, that
has the smallest share in the economically active
population, is likely to increase.
* To forecast GDP by industries, we first used
IMF’s projections of Mongolian GDP until 2018
carried out in October 2012. However, we
found that with these projections, the unemployment rate is likely to be lower than its assumed long-term (natural) rate of 6 percent.
Other things being equal (such as the trend of
foreign labor import), it means overheating in
the labor market hence could have an adverse
impact on the growth rate by increasing the
wage rate to adjust to the long-term equilibrium. For this reason, we revise down the IMF’s
GDP projections in our forecasting.
18. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
We forecast that real GDP growth 7.1 percent
until 2017 and 6.6 percent for 2018 to 20223. In
the next five years, industries will experience the
highest growth rates are mining and quarrying
(I2), transportation and storage (I8), information
and communication (I10). In the final five years,
however, the growth rate of these industries
tend to decline (see Table 2-6).
Table 2-6. Real GDP by industries (million MNT, at 2005 constant prices)
Growth (%)
Industries*
2007
2012
2017p
2022p
I1
732,275
807,208
947,449
1,170,091
2.0
3.3
4.3
3.8
I2
691,862
976,400
1,579,082
2,127,438
7.1
10.1
6.1
8.1
I3
328,067
383,449
637,422
846,806
3.2
10.7
5.8
8.2
I4
84,994
104,469
141,928
172,519
4.2
6.3
4.0
5.1
I5
18,459
22,676
32,969
42,854
4.2
7.8
5.4
6.6
I6
118,078
194,570
226,370
312,802
0.5
3.1
6.7
4.9
I7
534,378
1,199,157
1,504,011
2,109,736
17.5
4.6
7.0
5.8
I8
361,745
576,071
941,601
1,333,769
9.8
10.3
7.2
8.8
I9
28,998
64,930
69,752
96,008
17.5
1.4
6.6
4.0
I10
149,735
240,099
394,010
556,910
9.9
10.4
7.2
8.8
I11
128,635
280,834
347,503
491,645
16.9
4.4
7.2
5.8
I12
167,681
222,886
331,329
423,442
5.9
8.3
5.0
6.6
I13
18,470
63,400
76,357
110,696
28.0
3.8
7.7
5.7
I14
43,622
100,195
145,685
209,313
18.1
7.8
7.5
7.6
20072012
2012- 2017p2017p 2022p
20122022p
I15
69,847
75,198
107,878
127,897
1.5
7.5
3.5
5.5
I16
89,203
101,097
111,978
106,312
2.5
2.1
-1.0
0.5
I17
45,480
45,265
74,587
92,952
-0.1
10.5
4.5
7.5
I18
9,896
13,447
20,910
28,495
6.3
9.2
6.4
7.8
18,561
27,130
40,121
54,397
7.9
8.1
6.3
7.2
7,730,943 10,414,084
8.6
7.1
6.1
6.6
I19
Total
3,639,988 5,498,482
* see Annex for the meaning of the abbreviations.
3 According to the IMF’s projections, the average GDP growth is 8.5 percent until 2017 and 7.7 percent for 2018
to 2022.
17
19. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
B. Employment coefficient forecast
The employment coefficient is an indicator
measuring the required employment or the
number of workers to produce value added
worth 1 million MNT. In other words, this is the
inverse of labor productivity. Data on the value
added and employment of all 19 industries of the
economy for 2000 to 2012 are used to forecast
this coefficient at an industry level.
C. Employment forecast by industries
The total number of employees was 1.05 million
in 2012 and it is forecasted to increase to 1.18
million in 2017 and further by 205,446 to 1.26
million in 2022. The annual average growth rate
of employment is forecasted to be 2.3 percent
in 2012-2017 but decline to 1.3 percent in 20172022. In the entire projected period (20122022), the total employment tends to increase
on average by 1.8 percent or 20,545 employees
annually.
The forecast indicates that employment in the
Agriculture, Forestry and Fishing Sector (I1)
18
will decline by 51,706 employees by 2022. The
employment in the Construction Sector (I6)
is likely to increase with a relatively constant
annual average growth rate of 6 percent. The
Arts, Entertainment and Recreation Sector (I18)
has the highest annual growth rate of 12.3
percent in the first five years. Compared to this,
the employment in the Other Services Activities
Sector (I19) will have a slight annual growth in
the next 2 years but decline on average by 3.1
percent annually until 2022.
The employment in sectors such as Mining and
Quarrying (I2), Water Supply, Sewerage, Waste
Management and Remediation Activities (I5),
Professional, Scientific and Technical Activities
(I13), Public Administration and Defence,
Compulsory Social Security (I15), Human Health
and Social Work Activities (I17) are projected to
have a relatively high annual average growth rate
of 5-8 percent by 2022. Figure 2-3 compared
the weight of each sector’s employment in total
employment in 2012 and 2022.
20. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Table 2-7. Employment forecast by industries (persons, 2012-2022, %)
Change
Sectors
2012
2017p
2022p
Growth (%)
20122017p
2017p2022p
20122022p
20122017p
2017p2022p
20122022p
I1
369,960
330,890
318,254
-39,070
-12,636
-51,706
-2.2
-0.8
-1.5
I2
46,696
71,848
91,480
25,152
19,632
44,784
9.0
4.9
7.0
I3
64,897
81,600
88,754
16,703
7,154
23,857
4.7
1.7
3.2
I4
14,497
15,546
16,265
1,050
719
1,768
1.4
0.9
1.2
I5
6,681
9,891
12,856
3,210
2,965
6,175
8.2
5.4
6.8
I6
59,204
79,230
109,481
20,025
30,251
50,276
6.0
6.7
6.3
I7
131,340
147,710
128,148
16,370
-19,562
-3,192
2.4
-2.8
-0.2
I8
56,091
65,704
65,585
9,613
-119
9,494
3.2
0.0
1.6
I9
30,235
31,986
38,341
1,751
6,355
8,106
1.1
3.7
2.4
I10
14,740
19,262
23,433
4,522
4,171
8,693
5.5
4.0
4.7
I11
17,376
21,832
22,882
4,456
1,050
5,506
4.7
0.9
2.8
I12
1,208
1,301
1,659
93
358
451
1.5
5.0
3.2
I13
11,341
17,036
24,734
5,695
7,698
13,393
8.5
7.7
8.1
I14
13,334
14,483
11,772
1,150
-2,711
-1,562
1.7
-4.1
-1.2
I15*
62,919
89,184
108,962
26,265
19,779
46,043
7.2
4.1
5.6
I16
86,269
95,865
94,793
9,596
-1,072
8,524
2.1
-0.2
0.9
I17
37,529
59,184
73,829
21,655
14,645
36,300
9.5
4.5
7.0
I18
7,357
13,123
16,181
5,766
3,058
8,824
12.3
4.3
8.2
I19
Total
19,783
18,507
14,477
-1,276
-4,030
-5,306
-1.3
-4.8
-3.1
1,051,4571
1,184,181
1,261,886
127,740
77,705
205,446
2.3
1.3
1.8
* I15 represents “Public administration and defence; compulsory social security”. The increase projected in the
number of employees in this industry reflects the historical pattern only in a sense that it does not reflect policies
that the government intends to implement such as the “From the bureaucratic government to a smart government” manifesto.
19
21. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Figure 2-3. Observed and forecasted employment by industries (%)
Other service activities
2022p
Arts, entertainment and rec
2012*
Human health and social work activities
Education
Public administration and defence;..
Administrative and support service activitie
Professional, scientific and technical activities
Real estate activities
Financial and insurance
Information, communication
Accommodation and food service activitie
Transportation and storage
Wholesale and retail trade, repair of motor..
Construction
Water supply, sewerage, waste..
Electricity, gas, steam and air conditioning..
Manufacturing
Mining and quarring
Agriculture, Forestry, Fishing and Hunting
0
It can be seen that 35 percent of employees of
15 and older were employed by the Agriculture,
Forestry and Fisheries (I1) in 2012 tends to decline to 25.2 percent by 2022. Also the employment share in the sectors such as Wholesale and
Retail Trade, Repair Motor Vehicle and Motor-
20
10 20 30 40
cycles (I7), Administrative and Support Service
Activities (I14), Education (I16) and Other Service
Activities (I19) is likely to lower in 2022 compared to 2012. In contrast, the shares of other
sectors are likely to increase.
22. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
3
Employment forecast by occupation
In Mongolia, ISCO-08 occupational classification
groups are used and we carry out the
employment forecast for 2013 to 2022 for
each of the ten major groups (1-digit). In doing
so, we use the “industry-occupation” matrices
for 2007 to 2012. This matrix divides the total
employment size in a given year into industries
and occupational groups. For each industry,
by extrapolating the observed share of the
employment in each occupational group in the
total industry employment, we forecast the
“industry-occupation” matrix for 2013 to 2022
(see Tables 2-9, 2-10). Summing up across the
industries, we derive the total (economy-wide)
employment size in each occupational group
(Table 2-8).
Table 2-8. Employment forecast by 10 major occupational groups (number, %)
Major occupational
groups
M1
M2
M3
M4
M5
M6
M7
M8
M9
M10
Total
Growth (%)
2007-08*
41,646
114,433
44,044
16,840
110,567
363,511
90,479
70,029
48,254
899,802
2012*
2017p
2022p
58,429
161,560
37,069
27,064
162,105
362,750
93,241
78,240
70,734
5,250
1,056,441
76,423
196,699
52,135
30,022
177,769
319,927
127,043
101,578
96,987
5,600
1,184,181
87,788
227,045
57,916
34,177
173,289
306,790
145,660
110,298
112,027
6,897
1,261,886
20122017p
5.5
4.0
7.1
2.1
1.9
-2.5
6.4
5.4
6.5
1.3
2.3
2017p2022p
2.8
2.9
2.1
2.6
-0.5
-0.8
2.8
1.7
2.9
4.3
1.3
20122022p
4.2
3.5
4.6
2.4
0.7
-1.7
4.6
3.5
4.7
2.8
1.8
* NSO’s labor force survey /only domestic workers/
p Projected results /the sum of domestic and foreign workers/
For the period of 2012-2022, the fastest growing
occupations are М1 (manager), М3 (technicians
and associated professionals), М7 (craft and
related trades workers) and М9 (elementary
occupation)4. The average growth of the
employment in these occupations is over 4
percent. On the other hand, the demand for M6
(skilled agriculture, forestry, and fishery workers)
4 М2 is for professionals, М4 is for clerical support workers, М5 is for service and sales workers, М8 is for
plant and machine operators and assemblers.
21
23. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
tends to decrease. The decrease in M6 tends to
contribute to the increase in employment in the
most occupational groups.
The following figure compares the observed
share of the employment in each occupational
group in the total employment in 2012 with its
projected in 2022. In 2012, М6 (skilled agriculture,
forestry, and fishery workers) accounted for
34.3 percent of the total employment while in
2022, it tends to account for 24.3 percent. The
share of М10 (armed force occupation) tends
to remain roughly the same around 0.5 percent.
Figure 2-4. Observed and projected employment by 10 major occupational groups (%)
M10
M9
M8
M7
M6
M5
M4
M3
M2
M1
0.0
5.0
10.0
15.0
20.0
2022p
25.0 30.0 35.0 40.0
2012*
Below we show the projected “industry-occupation” matrices as of 2017 and 2022.
22
26. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
4
Unemployment rate forecast
We derive the unemployment rate forecast by
using the labor force (labor supply) forecast and
the employment (labor demand) forecast.
In 2012, the unemployment rate was 8.2
percent and we assume that the long-term
unemployment rate is around 6 percent (± 0.5
percentage points) to derive the results in the
forecasting model. In other words, we assume
that the natural (or structural, NAIRU) rate of
unemployment is about 6 percent. We revise
down the growth of GDP projected by IMF and
derive the labor demand such that the economy
will experience the natural rate of unemployment
in the long-term.
Table 2-11. Unemployment rate forecast (number, %, 2012-2022)
Labor demand
Labor supply
Unemployment rate (%)
2012*
1,056,441
1,151,146
8.2
2013
1,110,160
1,180,712
6.0
2014
1,137,663
1,203,672
5.5
2015
1,150,724
1,224,913
6.1
2016
1,168,275
1,244,381
6.1
2017
1,184,181
1,262,139
6.2
2018
1,198,089
1,278,435
6.3
2019
1,211,819
1,293,652
6.3
2020
1,229,756
1,308,260
6.0
2021
1,244,758
1,322,684
5.9
2022
1,261,886
1,337,189
5.6
* Source: NSO’s labor force survey
25
27. Medium to Long-term LABOR SUPPLY-DEMAND FORECAST
Annex: Abbreviated words
I1
Agriculture, Forestry, Fishing and Hunting
I2
Mining and quarrying
I3
Manufacturing
I4
Electricity, gas, steam and air conditioning supply
I5
Water supply, sewerage, waste management and remediation activities
I6
Construction
I7
Wholesale and retail trade, repair of motor vehicles and motorcycles
I8
Transportation and storage
I9
Accommodation and food service activitie
I10
Information, communication
I11
Financial and insurance activities
I12
Real estate activities
I13
Professional, scientific and technical activities
I14
Administrative and support service activities
I15
Public administration and defence; compulsory social security
I16
Education
I17
Human health and social work activities
I18
Arts, entertainment and recreation
I19
Other service activities
М1
Manager
М2
Professionals
М3
Technicians and associate professionals
М4
Clerical support workers
М5
Service and sales workers
М6
Skilled agriculture, forestry and fishery workers
М7
Craft and related trades workers
М8
Plant and machine operators and assemblers
М9
Elementary occupation
М10
Armed forces occupation
26
