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Tripartite negotiations on raising salaries and pensions are continuing, with Minister for Social Security and Labor T.Gandhi representing the Government, S.Ganbaatar the Confederation of Mongolian Labor Unions of which he is President, and L.Nyamsambuu the Union of Employers.
The Labor Union wants salaries of government employees raised by 50 percent this year and by another 60 percent next year. These employees account for 36 percent of total workers in
The Government is sticking to its offer to raise salaries by 10 percent by July 1 and by another 11 percent by November 1, but teachers and doctors do not accept this. Raising the salaries to this level would mean a budget deficit of 6.6 percent instead of the projected 5 percent in 2010. Inflation will also rise. The distribution to citizens of MNT 70,000 from the Human Development Fund has already resulted in 8% inflation. Increased salaries may push inflation to double digits, maybe even to 30 percent, further weakening the economy.
Workers in the private sector pay more taxes than budgeted government employees. The average income of government employees is 16 percent more than in private entities. The family of a “budgeted” worker gets free school tuition for one child. When they retire, they are given money equal to several months of salary. The private sector is burdened with taxes. Traders have to raise the price of their services and products to make ends meet. When prices rise, government employees again demand more salary. This goes on like a circle. According to the Finance Ministry, the Government would need to find USD 52 billion from foreign sources to meet the Labor Unions’ demand.
The Union of Employers also thinks doubling salaries and pensions would cripple the private sector. Only 10 percent of employers have the means to pay at such rates. The rest will have to cut their work force.
