|Project Rationale and Linkage to Country/Regional Strategy
Mongolia''s economy has grown rapidly with a two-fold increase in gross domestic product (GDP) per capita from 2001 to 2012, due in large part to the booming mining sector, which boosted its share of GDP from 9.0% to 18.6%. The rapid growth of the economy has significantly changed the structure of employment and the demand for skills. In 2012, the agriculture sector share of GDP (14.8%) was second after the mining sector, while agriculture employed the largest proportion of the labor force (35.0%), but its share of GDP and employment decreased by more than 10 percentage points during 2001-2012. The share of employment in the construction and mining sectors, on the other hand, had almost doubled in the same period, accounting for 5.6% (construction) and 4.4% (mining) in 2012. The three priority sectors (agriculture, construction, and road and transportation) contributed 22.9% of GDP as a whole and employed 45.9% of the labor force; women accounted for a minority of employment (46.8% in agriculture, 21.1% in construction, and 19.8% in transportation and storage).
The supply of skills, however, has not responded flexibly to labor market demand. Despite a strong demand for skilled workers, only 55.6% of TVET graduates found employment in 2012; the labor force participation rate remained at 63.6%, lower than the world average; and the national unemployment rate was 8.2%, with higher rates in urban areas (9.7%), and among youths aged 20 24 (18.3% for women, 16.1% for men). This situation can be partly explained by the country's TVET system whose linkages with industries and employers were weakened considerably during the transition from central planning to a market-based economy, and have never been fully restored.
The shortage of skilled workers constrains growth in some key sectors of the Mongolian economy. First, although Mongolia has unique and abundant agricultural resources, these have remained largely underutilized because of poor product quality and productivity, despite recent favorable government policies to support the introduction of modern technology in the production and the processing of agricultural products. This underutilization can be explained in part by difficulties in finding skilled workers in the sector. Second, the recent growth of public and private investments in housing and public facility development has generated employment opportunities in the building construction sector, which recorded the largest number of job vacancies of all sectors in Mongolia in the first quarter of 2013. Third, Mongolia is large, sparsely populated and landlocked, and the government has invested in road and railway construction projects to improve connectivity, both internally and with neighboring countries. However, serious shortages of skilled workers have often forced contractors to hire foreign workers.
To improve the responsiveness of the TVET system to labor market demand, the government initiated reforms beginning in the 2000s that have involved employers, and industry and professional associations. The amendment to the TVET law in 2009 was a landmark in recent TVET system reforms, establishing a specialized TVET agency, and the National Council on Vocational Education and Training (NCVET) as an institution to actively engage employers, and industry and professional associations in TVET policy development. Four sector subcouncils have been established under NCVET, but NCVET and the sector subcouncils have yet to become functional. With the support of development partners, competency-based curricula (CBC) have been developed for certain occupations, using standards set in collaboration with some employers. However, no standards have been approved by NCVET or sector subcouncils and widely recognized by the relevant employers, and industry and professional associations. CBCs were introduced relatively recently, and remain in an early stage of implementation. Moreover, graduates from TVET programs and courses have not been independently assessed and certified, and competency varies across TVET providers, programs, and courses.
In SY2012/13, there were 75 formal TVET providers, 49 of which were public. The government is the largest financier in the TVET sector, enabling public providers to offer tuition-free TVET, with dormitories and teaching learning materials that are largely free. Private TVET providers are also subsidized by the government. Student enrollment was 45,225 in SY2012/13; 45.6% were female. In SY2011/12 program and course enrollment in the three priority sectors was 2,088 in agriculture (27.3% female), 14,528 in construction (5.1% female), and 4,227 in road and transportation (11.9% female). Although both the number of TVET providers and TVET enrollment have increased dramatically in less than a decade, most TVET programs and courses have been offered without adequate training equipment and facilities. With the exception of those that have been supplied training equipment under projects funded by development partners, many TVET providers, particularly in remote areas, have been operating with training equipment that is outdated or can no longer be used, and training facilities that require repairs. Licenses have been given to TVET providers that meet basic requirements, but these requirements are insufficient to ensure quality at program, course, and institution levels. Inadequate training equipment and facilities are major constraints on the development of a TVET system that is responsive to labor market demand.
The lack of both technical and vocational skills and experience among teachers is another constraint faced by the TVET system. In SY2012/13, there were 2,236 full-time teachers; 1,468 (65.7%) taught technical and vocational subjects, but about 92.5% of them had only 0 4 years of industry experience in the subjects they teach. Most TVET teachers have been trained as general secondary education teachers, because qualifications for teachers in the TVET system have not been clearly specified. Institutional mechanisms for in-service training for teachers in technical and vocational skills are almost non-existent. Additionally, most management staff of TVET providers lack the industry experience and skills needed to develop and manage TVET programs and courses in collaboration with employers, and industry and professional associations.
Because of its poor public image, TVET remains a secondary option to most students and parents. The growth of student TVET enrollment has resulted largely from the monthly stipends given to TVET students, rather than their informed choice. Career information and guidance have not been provided for junior secondary students, who must choose between senior secondary education and TVET after graduation. As a result, TVET has enrolled students who are generally academically less successful and come from poorer families. Notwithstanding academic success, existing senior secondary and tertiary education do a poor job of preparing students for work, as evidenced by the low labor force participation rates for youths aged 15 24, and high unemployment rates for graduates from tertiary education.
Strategic fit. The Government Platform 2012 2016 highlights employment as one of five goals in creating a sustainable and competitive economy. Many initiatives are underway to reform TVET and general education systems in order to better prepare the country's labor force. The project will support the government's reform initiatives in the TVET and secondary education sectors. The project is included in ADB's country operations business plan, 2014 2016 for Mongolia, and is aligned with ADB's interim country partnership strategy, 2014 2016 for Mongolia, which has a focus on achieving inclusive growth and social development through broad-based employment generation.