Opening Remarks at High Level Meeting on Sectoral Collective Bargaining in the Coal Mine Sector on Job-Based Wage System

By Mr Tim De Meyer, Director, ILO Country Office for China and Mongolia

Statement | Ulaanbaatar, Mongolia | 07 December 2017
Minister S.Chinzorig,
Distinguished worker and employer representatives from the mining sector,

Good morning and welcome. Today represents a significant landmark in the development of collective bargaining and wage policy in Mongolia. I thank the Ministry of Labour and Social Protection for the organization and CMTU and MONEF for their support. A special vote of thanks to
• Ms Alimaa and Ms Munkhtogtokht (MSLP) for their tireless work in forging a broad consensus on wage reform in the mining sector;
• Mr. ROH Kwang-pyo, President of the Korea Labour & Society Institute; Dr. LEE Jong-su, and Dr. PARK Yong-cheol (from the same institute);
• President of the Mine Sector Trade Union Federation, Mr. Bayanjargal, and the President of the Construction Sector Trade Union Federation Mr. Battsogt;

ILO estimated to achieve SDGs, the world would need to create 600 mio jobs and 10 trillion USD of income – for most workers that income will have to either from wages or from social benefits. The reality is that wage growth around the world continues to be sluggish. At the same time, the labour share – that is the share of national income allocated to labour compensation as opposed to the share allocated to capital compensation – has steadily declined since the 1980s while income inequality has been rising. The labour share of national income is one of the SDG statistical indicators tracking progress on SDG 10. As for Mongolia, the World Bank and the NSO estimated that a zero increase in wages and pension benefits in 2015 and 2016 has contributed to a significant percentage of livelihoods slipping back into the poverty they has escaped by 2014.

Many factors influence this reality today, including slower economic growth as a result of reduced commodity exports and a crisis in public finance affecting the construction sector. Yet, certain features of the labour market in Mongolia are not helping: including high levels of temporary and informal employment, exerting downward pressure on productivity, but also the absence of collective bargaining and indeed more broadly the absence of wage-fixing mechanisms that systematically link wages to job content, be it education or skills, relevant experience, working conditions and levels of responsibility.

Today, all of this will be relegated to the past. What is going to be presented today is a proposal for wage reform that includes
• a commitment to a set of principles for wage reform that reflect the ILO’s fundamental values: equal pay for work of equal value; market-based wage-setting promoting fair remuneration on the basis of productivity and the value of work; and agreement on the final wage outcome by; the social partners
• a comprehensive methodology for job evaluation and job-based wage system development;
• a bi-partite joint commitment in 4 coal mine companies to bring this literature to life by initiating collective bargaining around wage scales developed on the basis of the methodology.

The mining sector good place to start building that work, given that it is the sector with the highest average wage and traditionally the driver of economic growth.

Today, the tripartite constituents operating in the coal mine sector will present the results of their work over the past year to pave the way for the establishment of a wage system that itself is based on job content and will form the basis for a regular collective bargaining process that enables wages to keep track of productivity and set the price of domestic coal at a correct level.

The intention is to replicate this work first in the cement manufacturing sector and the health care sector. Improving wage-fixing for health care workers will make an important contribution to social peace in the health care sector, but it should also improve the quality health care and in turn public trust and support for health care insurance.

I also hope that the work will serve as a model for sectoral collective bargaining in Mongolia. The government – in this case the Ministry of Labour and Social Protection – has already correctly established itself in this process as a facilitator and a moderator between the trade union and the workers on the one side and the employers on the other side. The Ministry supported the social partners by providing technical assistance and by providing “good office” to address difficult issues and to arrive at common understanding.

ILO appreciates the confidence the tripartite constituents have vested in us to provide them effective support.

I encourage the social partners in the coal mine sector to run with the reform plan and bring the collective bargaining to a successful conclusion. This meeting will be important in giving support to the social partners to bring this work to final conclusion.

I wish all you of a great success in this important moment.